Managed Funds Deliver Strong Performances in 2004
New Zealand investors in managed funds enjoyed a prosperous year in 2004, according to figures released today by
investment research company FundSource. NZ Equity and Diversified funds in particular delivered strong performances, and
all sectors presented positive returns over the year.
The highest returns for 2004 were generated by NZ Equities with average fund returns of 17.12% for the year.
International equity funds showed the influences of an appreciating New Zealand dollar by posting an average 5.33%
annual return, though in December they delivered the highest returns, with a sector average of 2.76% for the month
alone.
Following is a summary of the main investment sector performances:
New Zealand Equity (Active) Unit Trusts
The Active NZ Equity sector averaged 17.12% for the year, up from 16.24% in 2003. Two consecutive years of returns in
the high double-digits is a pleasing result for those investors who have bucked the general trend away from growth
assets and remained loyal to NZ Equities in recent years. Over $800 million is invested in NZ Equity managed funds.
Fisher Funds NZ Growth fund again delivered the highest returns in the sector, with 26.01% for the year (3.90% for
December), and the Asteron NZ Share Growth Trust 18.92% (2.30% in December). Over the longer term, Fisher Funds is again
the top performer, with a five-year annualised return of 13.29% against a sector average of 7.82%, and AXA Australasian
Selected Equities follows with 10.68%.
This sector’s performance reflects the strength in the New Zealand sharemarket where the active index, the NZSX50 Gross
(33%), rose 16.32% in 2004.
"Underlying economic activity continues to feed momentum in NZ equities” says Tim Anderson, Business Manager at
FundSource. “In spite of rising interest rates and a forecast economic slowdown, investors remain confident that the NZ
sharemarket can continue this run of positive performances.”
The lowest annual return came from the Westpac Selected NZ Shares Trust, with 14.16%, and AMP NZ Shares Trust with
14.89%, still respectable returns.
International Equity (Global) Unit Trust
International Equity (Global) funds have around $1.6 billion under management in NZ, and returned an average of 5.33%
for 2004 and 2.76% for the month of December. The ASB World Shares Trust ranked first within the sector with 7.42% for
the year, and the AMP International Shares Trust was close behind with 7.27%.
Once again returns for this sector exceed the relevant index benchmark, the MSCI World Free Gross (33%) index, which
returned 3.48% in New Zealand dollar terms over 2004, demonstrating the value added by professional management.
While international equity markets performed strongly in 2004, it was the appreciating NZ dollar that had the greatest
influence on performances for New Zealand investors. The NZ dollar appreciated 9.63% over 2004, which reigned in the
MSCI World Gross (33%) index from 7.93% in local currency performance to 3.48% after conversion to New Zealand dollars.
"While international equity markets performed well in 2004, it was the appreciating NZ dollar that dampened returns for
local investors. The good news is that it looks like we have seen the highs in the NZD/US rate for now" says Tim
Anderson Business Manager at FundSource. “Though the NZ dollar is likely to remain reasonably well supported at
historically high levels versus the USD, we anticipate the negative effect of the rising kiwi on international funds to
dissipate. Longer term we may even see a retreating dollar provide a positive return kicker for offshore funds.”
Diversified Funds
Balanced funds, the most popular sector in the NZ market with $7 billion under management, returned a very solid 7.08%
in 2004, with 1.43% for December. In line with the positive performance of domestic and global sharemarkets, Growth and
Defensive fund performances reflect their relative weightings to income and growth assets with the Growth sector
averaging 8.66% for 2004 and Defensive 4.93%.
The top performing Balanced fund over 2004 was the AMP Citigroup Balanced Trust with 10.13%, followed by the ING
Balanced Fund with 9.98%. Of the Defensive Funds, the ANZ Conservative Growth Fund was the top performer with 6.50% and
the Fisher Funds Fledgling Fund was the best of the Growth sector at 10.77%.
The lowest returns in each of the Balanced, Defensive and Growth sectors were the AMP Balanced Trust (ANZ) (4.29%),
Public Trust Defensive Fund (1.83%) and BT NZ – Managed Growth (7.02%) respectively.
"Overall the funds management industry is pleased provide their investors with very solid performances over 2004. With
momentum in the New Zealand market continuing to be favourable, a stabilising New Zealand dollar, firm commodity prices
and robust global growth, FundSource believes investors can look forward to a fruitful 2005." says Tim Anderson,
Business Manager at FundSource.
Website: www.fundsource.co.nz
ENDS