A rare opportunity

Written By: - Date published: 6:26 pm, February 19th, 2010 - 6 comments
Categories: business - Tags: ,

It is not often that I compliment the authors that write for No Minister. However I have to compliment SageNZ for his prescient post about Huljich Wealth Management – “Huljich funds and stock pumping”.. I noticed the post while I was scanning their site with my usual level of mild distaste (it usually feels like a mix between The Truth and bad late night talkback) along with a couple of other posts on kiwisaver funds. To my eye what SageNZ had uncovered looked distinctly fishy.

Then for the investors after March 2008 they do not calculate the growth from inception but instead take advantage of that nice fake buffer by calculating the unit price from the ramp rather than as a weighted average of returns from inception. The unit price is nominal and subsequent investors would not be prejudiced by the ramping but would simply have been mislead into investing in a fund that actually made a loss in its first 6 months. It would be fascinating to see their weighted monthly portfolio returns against the value of the portfolio at that time along with a link to their portfolio structure at each point. The definition of “Investment Returns” is interesting. I cannot see whether it is mark to market or actual cash.

According to the Herald today..

A probe into how Huljich Wealth Management has been reporting historical investment returns has prompted the KiwiSaver provider to withdraw its current investment statement.

The Securities Commission, in a news release, says it understands that Huljich, which is chaired by former National Party leader Don Brash and has Auckland mayor John Banks as a director – is preparing a new prospectus and investment statement.

In this case the fluff levels and crazy accounting got caught, and hopefully more of these types of dubious documents will in future. However this is exactly the type of dubious financial statement that appears to be designed to cause the financially illiterate to look at an opportunity too good to miss.

Which is what another author (adolf) at No Minister must feel like after he fell hook line and sinker for the Huljich message while having a go at Gareth Morgans kiwisaver fund GTK.. Hopefully he didn’t sink money there either. But I’d suggest that he should invest in some basic financial literacy training.

The directors, especially Don Brash and even John Banks, should have never let this prospectus go out without checking the dubious accounting. It was clearly too good to be true as even a cursory glance at the books would have shown them.

6 comments on “A rare opportunity ”

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  1. lprent 1
    19 February 2010 at 6:37 pm

    I should add that I recently castigated sagenz for being a scientific illiterate on climate change. But I guess that financial literacy doesn’t imply good sense in every area of knowledge.

  2. Gooner 2
    19 February 2010 at 8:19 pm

    Thanks for the “compliment”. Group blogs are a difficult beast as I’m sure you appreciate. I commented on Adolf’s post mentioning the negative articles they were gettting in NBR.

  3. Gooner 3
    19 February 2010 at 8:24 pm

    Am I in moderation? My comment never appeared – so here it is again.

    Thanks for the “compliment”. Group blogs can be difficult beasts as I’m sure you appreciate. I commented on Adolf’s post saying that Huljich had recently received negative vibes in a NBR article so I feel a little vindicated now.

  4. Draco T Bastard 4
    19 February 2010 at 8:42 pm

    The directors, especially Don Brash and even John Banks, should have never let this prospectus go out without checking the dubious accounting.

    the question that needs to be asked though is: Did they check the dubious accounting?

  5. lprent 5
    19 February 2010 at 8:59 pm

    No gooner. You aren’t moderated. But I saw adolf’s post and thought I must write on that. But sage analyzed it earlier and better.

    I’d have stopped at “too good to be true”.

    Ummm task for the weekend – get rid of the escape chars from rss comments.

    But the compliment was genuine. I have an odd standard. Compliments are hard won. I’m afraid that my highest compliment on food is “that’s edible”.

  6. Lanthanide 6
    20 February 2010 at 10:25 am

    I’m with Gareth Morgan Kiwisaver. Every month you get a report of exactly what your money is invested in, and exactly what your returns have been since inception (with a line graph) against the benchmark they compare themselves to. You also get a history of exactly when funds were received from the IRD and the date at which your employer passed them on – at the moment it looks like there’s a 6-8 week lag between when you get paid and the kiwisaver deduction turns up in your account. Everything is shown in $, rather than ‘units’, so it is quick and easy to know how much you have.

    I went through and read the negative articles about Morgan’s performance vs the others. I’m not sure exactly what the morgan number (-3.7%) represents, but the monthly number that you get is your gains *after fees and tax*. It is possible that the positive numbers they are comparing this with are just straight returns before fees and tax, don’t know.

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