Fund managers back simplification plans

Fund managers are backing a proposal to shorten investment disclosure for managed funds to make offer documents easier for investors to understand.

Tower Investments chief executive Sam Stubbs said he is behind the Economic Development Ministry's proposal to shorten investment statements as suggested in the recent Review of Securities Law discussion document.

At present investment documents, like a lot of the offers for KiwiSaver schemes, have between 20 and 30 pages, including application and payment forms.

Mr Stubbs said producing short-form investment statements of legally prescribed form and content "should go a long way to demystifying the investment process for consumers".

The European Union's key information document format of two pages for investment statements and Australia's new product disclosure statement regime with a maximum of eight pages for superannuation and simple managed fund offerings were among the documents he suggested New Zealand imitate.

These documents would allow investors to better make direct apples-with-apples comparison between competing providers, he said, but fund managers could always publish additional information where they thought it was relevant.

"We would not have a situation like the present wherein marketing material and legal compliance opt-outs jostle willy-nilly with statutory information in investment statements to the perplexed confusion of mum-and-dad investors."

Mercer's New Zealand principal, Paul Newfield, said a clear, transparent and member-friendly document would enhance financial literacy among New Zealanders and spark more interest in KiwiSaver.

But simplification needed to be balanced against providing sufficient relevant information on how the product works, who the providers were and their background, he said.

- © Fairfax NZ News