Fund history should reset after reclassification, adviser says
Milford’s Active Growth Fund reports a five-year return of 9.8% a year and 10-year return of 12.4%.
But adviser Rachelle Bland has taken issue with that because, until the first quarter of 2017, the Milford Active Growth Fund was classified as an Australasian equity fund, with 62.2% in NZ domiciled assets and 21% in Australia.
“Then, in Q2 2017, it was re-classified as a ‘growth’ fund, with 46.3% in NZ domiciled assets and 74.7% in growth assets. And after a single quarter of being classified as a growth fund, [Morningstar] report the fund as ranking for first place for three and five years. This is a blatant falsehood. The fund had only met the growth fund criteria for three months.”
She said, if a fund changed its investment mandate or made significant asset allocation changes, the returns quoted in reports should start from the date at which a fund met the criteria for a new category.
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