The Trusts, this is where your money went:
(1) The Cash Fund
(2) The Cash Plus Fund
(3) The Conservative Portfolio Selection
(4) The Prudent Portfolio Selection
(5) The Moderate Portfolio Selection
(6) The Aggressive Portfolio Selection
(7) The Principals of Wealth Portfolio Selection
(8) The Dividend Generator Fund (formely The Dynamic Equity Yield Fund)
The Trusts Lent Money To The Following Pools
This is the start of the merry go round where your money is on lent over and over again, and fees are added at every step of the way
(a) High Yield Cash Pool (Manager – New Zealand Funds Management Ltd)
(b) Super Yield Pool (Manager – New Zealand Funds Management Ltd)
(c) NZ Fixed Interest Pool (Manager – New Zealand Funds Management Ltd)
(d) Australasian Core Equity Pool (Manager – New Zealand Funds Management Ltd)
(e) Australasian Equity Growth Pool (Manager – Walker Capital Management Ltd)
(f) Global Core Equity Pool (Manager – Wellington Management Company, LLP)
(g) Global Equity Growth Pool (Manager – Capital International, Inc)
(h) Global Equity Value Pool (Manager – Alliance Capital Australia Ltd)
(i) Global Equity Small Companies Pool (Manager – Well.Management Company, LLP)
(j) Dividend Yield Pool (Manager – New Zealand Funds Management Ltd)
(k) Global Absolute Return Pool (Manager – New Zealand Funds Management Ltd & Direct Capital Management Ltd)
As can be seen, the bulk of the funds have been lent to New Zealand Funds, which is ultimately owned and controlled by Doug Somers-Edgar’s good friends, Gerald Siddall & Russell Tills.
Consumer Magazine Report May 2005:
The Consumer Magazine wrote an article in May 2005, which upset Doug Somers-Edgar considerably, but proved to be completely accurate.
They told the story of a lady by the name of Margeret Coutts (not her true name), who invested a reasonable sum with First Masterfund in 1997, and then proceeded to indicate what she had gained from her investment.
They pointed out that seven years later on, her nest egg had hardly grown at all.
What’s more, the reports she got from Money Managers did not make it clear how much she has made or lost, or what she has paid out in fees. And Margaret was not alone – they had spoken to other Money Managers’ clients with similar complaints.
They maintain, Money Managers should be viewed as a sales force for its own investment products, not a source of independent investment advice.
They report that Mr Somers-Edgar has other financial businesses which he shares with two other Auckland businessmen – Gerald Siddall and Russell Tills. The businesses that these three own can profit significantly from money invested with Money Managers. In their opinion, this could well colour the financial advice being given.
The scheme also allowed the funds to be invested in or lent to businesses owned by or associated with these men, so they may also benefit in another way – getting capital and loans they may not get elsewhere.
For First Masterfund it was not easy to figure out what the total fees were – the regular monitoring reports to investors did not say. Nevertheless, they pieced together information from investors’ accounts and the prospectus to estimate the total costs. And that was not pretty reading.
In summary, Margaret’s investment had barely kept up with inflation. Based on their calculations and the latest valuation they had (September 2004), since she first invested her lump sum, Margaret’s investment has earned an average of 1.5 percent a year after tax and fees.
August 2010:
The latest calamity regarding First Masterfund was reported in the Herald on Sunday 22nd August 2010:
http://www.stuff.co.nz/business/4048405/Empires-fall-a-disaster-for-investors
It describes how investment funds managed by NZ Funds provided finance to property developments undertaken by McKenna’s Melview group of companies, but several of these have since collapsed into liquidation and the funds now face substantial losses.
Many of those investors would have invested in the affected funds through NZ Funds’ sister company, Money Managers, now called MMG Advisory Partners.
About $100 million of investors’ money was channelled through a company called Fidelity Ltd, which is largely owned by interests associated with NZ Funds’ founders and major shareholders Gerald Siddall and Russell Tills and Auckland financier Martyn Reesby.
The investment funds which had money channelled through Fidelity by NZ Funds were Moderate Portfolio Selection, Prudent Portfolio Selection, and Aggressive Portfolio Selection, all of which were marketed under the First Masterfund banner, and the Super Yield Fund and Private Mortgage Fund.
In Summary:
Money Managers has morphed into MMG, but is ultimately owned and controlled by the same people.
This was an attempt to divorce itself from the bad practices of the past, and gain some respectability, but they may struggle to convince the general public to part with their money especially with their current history.
Time will tell just how the investors in First Masterfund will fare, with the very poor returns indicated by the Consumer magazine, large losses that have occurred in the Cash Plus Fund, and the losses suffered by the trusts mentioned above, the signs do not look good.
Is Money Managers still going under some other name?
Is there a court case pending?
DNZ seems to be doing well. We stayed with them. Perhaps some day they will be worth our original investment.
But are they now completely separate from Money Managers, and not having any money creamed off?
Fortunately we got out of First Masterfund in time.
Time will tell how DNZ shares do. With such a lot of selling, somebody must think they are worth buying.
It’s been an interesting ride, and we have got back just about what was invested.
It remains to be seen what comes to light in the future, and whether any new regulations are brought in to stop this sort of scheme starting up again.
Looks like Money Managers First Masterfund is in the News and on TV.
The current fiasco (Sept 2010) occuring at Auckland’s five start Westin Hotel is part of the collapse of Nigel McKenna’s “Melview Development” empire.
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10670473
The article talks about the fact that just over half of Auckland’s five-star Westin will be off-limits to guests after a fight between receivers and suite owners.
Westin, the international hotel operator, will lose control of 110 of the 170 rooms at the Lighter Quay hotel.
Graham Wilkinson, a hospitality expert representing owner/investors of 110 units, said his group was extremely disappointed.
The closure of these rooms means that the Westin, which operates the hotel, will shortly have less than 60 units to operate and is expected to shortly lay off up to 100 staff,” Wilkinson said.
The Westin Lighter Quay Hotel was developed by Nigel McKenna’s Melview under a unit title structure with 173 rooms and a variety of commercial spaces with individual unit titles. Melview guaranteed unit owners a fixed return for three years.
But Wilkinson said unit owners later discovered that under their leases they were required to pay an annual rental lease cost of more than $2.5 million for the commercial spaces to Melview but did not receive any income from those spaces.
Melview defaulted on its obligation to pay rent from the hotel business to the owners who put a company into liquidation. The main creditor, Bank of Scotland, appointed KordaMentha to the Melview companies that held the leases of the rooms, he said.
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Some of the funding for this project came via NZ Funds, who in turn collected the money from the hapless investors in Money Managers First Masterfund.
No good will come out of all this, only further losses for the First Masterfund investors