The Financial Markets Authority is warning fund managers against potentially misleading investors over phenomenal annual investment returns on their investments.
FMA investment management director Paul Gregory said fund managers should avoid advertising large investment returns for the year to March 31, a period that included none of the massive Covid-19 related sell-off in February and March last year, but included all of the recovery that followed.
Focusing on the recovery alone gave the appearance of “phenomenal returns for many funds, particularly those with large exposures to equities”, Gregory said.
The authority was concerned that without context, investors being marketed returns for the period through social media, websites and other channels, could be misled into thinking they were typical of market performance or that particular managers had significant, repeatable skill, he said.
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For example, for the year to March 31 the NZX 50 index gained 23.94 per cent in value.