Fund managers bleary from a night celebrating the success of their own kind awoke Thursday morning to news that an outsider, and upstart competitor, had slipped up.
After weeks of controversy the resignation of Peter Huljich from the investment/KiwiSaver company he started was not really surprising.
Few rivals will miss him but the mood amongst fund managers following Huljich’s exit was one of relief that something has happened rather than gloating at the fall.
One KiwiSaver manager told me the actions against Huljich, and consequent resignation, were encouraging evidence that the regime’s check and balances worked – albeit a bit slowly.
Another said the fact the story made the headlines at all – outside business pages – was a milestone for the funds industry and a step in the right direction for financial literacy.
“Who would’ve thought,” he said, that the public would actually care about a technical funds management issue.
Another interpretation could be that the presence of celebrities Don Brash and John Banks in this story ramped up its newsworthiness.
Let’s be generous and say people now want more information about investment performance attribution and less about the social lives of celebs.
If so, they’ll be interested in how the Huljich funds track from here on in. The appointment of Brash as the company’s managing director and chief investment officer might calm a few nerves.
However, Brash doesn’t really have experience as a fund manager. It’s one thing to make big picture decisions about interest rates; it’s quite another skill to manage money day-to-day. Competitors I spoke to were quite bemused about the move – and perhaps it is just an interim solution.
Some also pointed out that Brash, as a director, still bears some responsibility for earlier Huljich decisions. Another also baulked at his use of the word ‘independent’ next to ‘director’. Both Brash and Banks are minority shareholders in Huljich, which is all above board, but it does tarnish the independence claim.
Tags: David Chaplin, kiwisaver
Maybe it does tarnish the Independence Claim — but there is nothing like having some of your own coin invested in the company to give you a very strong sense of “Your Coin is at Stake here as well “. And so you get a much more focused management. It is the same induced thinking that every private Business Owner has that is hard to replicate, compared to if you are just working for a salary. This little exercise will do Brash good. Lets see if an Ex Reserve Bank Governor, can really perform in the market place. It will take 5 years but we will see if he has got the stickability.
Sage, there is a difference to investing your own money in with the pool and having a shareholding. As a shareholder you would do ANYTHING to grow the company. That’s how Huljich got in this mess in the first place!
Well grumpy, why do quite significant companies offer shares to executives. Some get bonus shares, each year, if the company does better than the last year. Does Brash need that incentive too ?? Maybe he can’t put that incentive of bonus shares in place, since he is the Fund Manager, and Chairman of the Board of Huljich (?), as well as fund manager. Normally that would be a Board decision to give incentives to their CEO(Fund Manager). I think Huljich was just misguided. Apparently Huljich used his own money to prop up the results. Thats very concientious isn’t it ??
Sage, there are subtle differences I hoped you would see. Any bonus renumeration tends to lead to short-term risk taking for that person’s benefit, not always the long-term interest of the client’s. If they lose it all, they shrug their shoulders and move on to their next company (aka victim). In the end though, if Brash has the ethics, it doesn’t matter how he is renumerated. Huljich obviously didn’t have the goods.