Clar­i­fy­ing South Waikato In­vest­ment Fund sta­tus

South Waikato News - - NEWS -

South Waikato District Coun­cil lost $ 720,000 in in­vest­ments be­tween July 2011 to Septem­ber 2011.

The loss comes from the South Waikato In­vest­ment Fund which was cre­ated with shares from Power Co.

In July 2011 the fund lost about $ 315,000 – as­so­ci­ated mainly with the gain in the Kiwi dol­lar against the Amer­i­can dol­lar.

The re­main­der of the $ 405,000 lost in Au­gust and Septem­ber 2011 was at­trib­uted to mar­ket move­ments.

In­vest­ments made by the South Waikato District Coun­cil are ac­tioned by the Trea­sury Man­age­ment Over­sight Com­mit­tee.

District coun­cil chief ex­ec­u­tive of­fi­cer David Hall said the money in­vested did not come di­rectly from ratepay­ers.

‘‘Tech­ni­cally all coun­cil funds are ratepayer money. How­ever ratepay­ers did not ac­tu­ally con­trib­ute money from their pock­ets to this fund.

‘‘The funds in SWIF orig­i­nally came from Power Co shares. The Power Co trustees in the South Waikato opted for in­vest­ment and this is what forms the cap­i­tal base of the SWIF,’’ Mr Hall said.

The SWIF is a long- term in­vest­ment ac­count.

‘‘With any long term in­vest­ment there are good years and bad years, ups and downs,’’ Mr Hall said. ‘‘In­vest­ment ad­vice in­di­cates that shares will out­per­form cash in­vest­ments in the long-term. Last year for ex­am­ple we ac­tu­ally went up by close to $1m. We took a knock this past fi­nan­cial year but lat­est fig­ures show that last month the fluc­tu­a­tion re­serve went up by $301,000. The share loss for the fi­nan­cial year to the end of Oc­to­ber is now $418,000.’’

The SWIF ac­count cur­rently holds $6m dol­lars in shares off­shore.

South Waikato In­vest­ment Fund at a glance

Cap­i­tal: $21.7m (this is the ac­tual shares from Power Co)

The coun­cil have in­fla­tion­proofed this, which has added about $3m to the fund.

On top of that is the fluc­tu­a­tion re­serve.

This re­serve caters for mar­ket changes; it is this re­serve that the De­cem­ber re­port in­di­cates lost $720,000. This fund is cur­rently in deficit of $0.9m.

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