Accounts reveal that Auckland Regional Holding's controversial "Diversified Fund Asset" was down $50,715,000 on plan for the 6 months ending December 2008. This includes the $25 million losses reported in the September 2008 quarter.
One helluva Christmas present for Auckland.
Sure some of these are reported as "paper losses", but you'd be a brave - perhaps even foolhardy - person, to bet your bottom dollar on results getting better any time soon.
Put simply, at the start of this financial year - 1st July 2008 - this ARH fund (which includes global equities, global bonds and some NZ cash assets), had a market value of $300 million. Now it's worth $262 million. The losses include losses in capital value plus losses against planned earnings due to the fact the investments performed so badly.
Put even more starkly, the DFA was fully established in December 2007, when it's market value was $309 million (because ARH put in about that amount in cold cash). This fund was established following ARC's majority vote decision to support this "material transaction". This vote was opposed by a significant minority of ARC councillors - including me.
So $309 million of regional savings - held in trust for public transport and stormwater investments - was invested in the stock exchange just over a year ago. And as at the end of December 2008 it was worth $262 million - without generating any revenues along the way.
If ARC had insisted ARH kept that money in the bank instead, earning 5% interest, that capital sum would have been worth $324 million by Christmas 2008.
One helluva Christmas present for Auckland.
Sure some of these are reported as "paper losses", but you'd be a brave - perhaps even foolhardy - person, to bet your bottom dollar on results getting better any time soon.
Put simply, at the start of this financial year - 1st July 2008 - this ARH fund (which includes global equities, global bonds and some NZ cash assets), had a market value of $300 million. Now it's worth $262 million. The losses include losses in capital value plus losses against planned earnings due to the fact the investments performed so badly.
Put even more starkly, the DFA was fully established in December 2007, when it's market value was $309 million (because ARH put in about that amount in cold cash). This fund was established following ARC's majority vote decision to support this "material transaction". This vote was opposed by a significant minority of ARC councillors - including me.
So $309 million of regional savings - held in trust for public transport and stormwater investments - was invested in the stock exchange just over a year ago. And as at the end of December 2008 it was worth $262 million - without generating any revenues along the way.If ARC had insisted ARH kept that money in the bank instead, earning 5% interest, that capital sum would have been worth $324 million by Christmas 2008.
A nice regional nest egg.
But instead it's worth $262 million. A cool $62 million less than if it had been left in the bank earning 5% interest.
You could buy a lot of new trains for that.....
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