NASFUND members have been credited with 15% for last year on the back of a strong net profit of K294 million and net value asset of K2.22 billion, The National reports.
However, members were cautioned to lower their expectations as the same might not apply for this year due to expected change in economic conditions.
The e-newsletter yesterday said the fund did exceptionally better in fund returns over one-to-10 year period.
The newsletter cautioned members that the 15% credit rates were extraordinarily high and rarely matched year on year.
The fund, as reported last month, had anticipated a model generated return this year of around 8%-9%.
From last year’s return of 16.93%, some of these returns have been parked in reserves, while anticipating the impact of a higher currency and lower capital values.
Reserves are now around 4% of net asset value.
This made Nasfund the highest reserve fund in the country with over K88 million in reserves, which would also provide some insurance for any shock either in PNG or world economy this year.
The aim for this year is to balance the enormous previous returns based on particular asset class settings and bring the fund’s asset allocation into alignment to counter what is seen as emerging issues both at home and abroad.
To this end, Nasfund will set a course for a soft landing this year and that means a return to lower but more sustainable long term returns.
Nasfund asks again for members to readjust expectations in light of the current events unfolding and not to assume double digit returns are the norm.
Managing a Super Fund such as Nasfund is not rocket science. It is a no brainer with the rights systems and key desk people. In Australia, Thailand, Europe single individuals with one admin person run Funds that are several times larger than Nasfund. Crediting of members with 15% interest is not the same as paying them 15% dividend on their total contributions.It is sickening to see people talk big as if it is such a complex undertaking. You have over K10 million coming into Nasfund account by force of legislation. Ofcourse it will always make money! Interest Crediting is only a paper transaction, unlike dividends that requires cash outlay. This way the Members are tricked into feeling good that they earned something, when they may not have.Rod Mitchel and his Merry man may well be converting capital appreciation into credit on interest, and there may not be any actual cash retained. He may well be covering his position with fancy footwork in asset re-valuation execises. So to really substantiate this earning one has to look at the Books of Nasfund, to see whether this liability is properly supported, and even then, the Fund can defer honouring the liability or spread it over several years, hence, the caution not to expect anything next year. So whats the point of such announcements? To make the members feel good. That the Board and the Management was doing something good. Very deceptive indeed.If only the Members knew that Rod just shafted them with an immediate tax libility without paying them any cash, they would want to find him and squeeze his neck. The only advantage (which Rod has not told anyone) is that Rod can now earn his huge cash bonuses based on performance, while the Members get promises on pamphlets to chew on. I say let them eat cake! What do you say Rod?
ReplyDeleteSorry that was K10 Million per week minimum that comes in to NasFund by force of legislation.
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