Waipori Fund takes another beating

Investments in the Dunedin City Council's Waipori Fund took another hammering in the three months ended March, although indications are that it was a better result than recorded in December.

The fund recorded an overall loss in value of more than $451,000 for the quarter with the major contributor being a $1 million drop in value of share investments.

Analysis of the fund's statement of financial performance showed that the fund had a target surplus of $1.5 million for the March quarter.

The $451,000 loss was a nearly $2 million turnaround on forecast.

For the year to date, the fund has made a $3.6 million loss compared with a forecast surplus of $5 million - an $8.6 million turnaround.

Dunedin City Treasury has forecast a target surplus for the year ended June of $6.7 million.

Most indicators, with the exception of exchange rate movements and dividends, were below forecast.

The fund had a $566,000 loss on the sale of shares as well as the $1 million loss in value.

In a report prepared by Dunedin City Treasury for today's council finance and strategy committee, treasury chairman Ross Liddell said that while in absolute terms the total equity portfolio experienced a negative return for the quarter, the March month was one of the most positive returns for some time.

However, it was not sufficient to offset the negative returns in January and February.

Cash flow from dividends, interest and rents continued to prove "relatively solid" for the quarter.

"Future income levels from interest and dividends is likely to be lower and the level of growth in equity markets will depend on the effectiveness of global stabilisation policies."

At the March balance date, the fund was worth $68.1 million, down from the $72.7 million at June 30 last year.

The committee will also today consider the financial results of the council for the nine months ended March which show an $8.4 million deficit compared with a forecast deficit of $2.2 million.

The council is forecasting a surplus of $17.4 million for the year ended June.

So far, the council had spent $74.4 million on capital expenditure which was 41% of the full-year budget of $181 million.

Loans to the value of $43.7 million had been raised to date, compared with the full-year budget of $92.5 million.

 

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