Regulators in New Zealand have warned fund managers to avoid advertising eye-watering 12-month returns caused by COVID-19.
The Financial Markets Authority (FMA) is also finalising draft rules telling the sector information cannot be “cherry picked” to create a more favourable impression.
The warning came to counter advertising hyped returns without highlighting the sweeping sell-off at the beginning of the pandemic, during February and March 2020.
Some phenomenal returns for many funds, particularly those with large exposures to equities could fool investors, the FMA said.
“The FMA is concerned investors being marketed returns for the 12-month period through social media, websites and other channels, without context, may be misled into thinking they are typical market performance or that particular managers have significant, repeatable skill.”
Warnings against too good to be true returns on social media have also been posted in the…