Forum Archive Index - January 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

 

Hugh,

 

Let us discuss institutions / banks / insurance companies and other fund managers!

 

H: Oh, the word ' institution' gives me a rash! I get sick whenever this word is mentioned.

 

G: Why?  H: Many have acted against the interests of the country and those of the smaller shareholder.

 

I am referring to takeover- and other rules applied by the stockexchange. These favour institutions. 

 

G: Are you also referring to their support of company directors wanting higher fees / options regardless of the damage done to a company if such a proposal went ahead?

 

H: Many are lemmings; they support anything! But why?

 

G: Could it be that because of the size of their holdings, they have more influence than the small shareholder?

And that some could be ' closer ' to the company than desired?

 

H: I get it: " I scratch your back and you scratch mine"

 

G: Difficult to prove; nevertheless, the investor wants  to know when an institutional holder ' abandons a sinking ship'.

Announcements are made from time to time; sometimes their excuse is genuine, often it is not!

 

H: I can still remember investment companies claiming that they were ' in there for the long run '. Some Americans were well known for similar statements.

 

G: Yes, and after a short time, they were gone!

H: How do you rate NZ institututions?

 

G: Agreed that the worst performing ones had to curtail their investments.

I am particularly referring to those who operated superannuation funds and unit trusts and whose capital and / or investments were wittled down to a few million dollars.

 

I don't understand that the small investors stood by these operators when relative costs increased!  

 

H.Over the years, their returns have been totally unsatisfactory; I won't rate them!

 

G. Many small investors are not sophisticated; mind you, we also had to start somewhere!

 

I have voluntary advised a few people from time to time and I thought that they were potential ' bait ' to unscrupulous paid advisors.

 

Many think that the advice will be better if they paid for it!!  

 

H: I am incensed when these institutions use ' average ' instead of ' compound ' returns.

We discussed this before in our post of Dec.19. 

 

G. I feel that institutions ought to more pro-active.

Some may start with protecting the investments of their clients: no unnecessary overseas trips and other junkets!

 

Gerry