Active NZ Equity Funds Rise Above the Market
Sharemarket returns in New Zealand and around the world may have dampened the performance of some managed fund sectors
in the month of August, but fund managers of active NZ Equity funds outshone the market, with just over half delivering
positive results despite the negative market performance for the month.
The sector averaged 0.39% for the month, bringing the result for the year to date to 14.24% net of tax and fees
according to the latest managed fund performance figures, released today by investment research company FundSource.
After three consecutive months of strong returns across the board, August brought very slightly negative returns to many
of the funds with significant exposures to local and international shares, reflecting the events in these markets.
However, a month of very mild negative returns has had little impact on performances over longer time periods, with all
sectors delivering positive average returns over 3- and 12- month timeframes.
FundSource’s managed fund returns are provided net of all relevant fees and taxes, reflecting the returns received by an
investor in the fund.
Funds invested in NZ Property delivered the top performances in August, with 1.40% for the month bringing the 12-month
result to 14.34%. Given the weak sharemarkets for the month, funds investing in income assets were the stronger
performers in August. Mortgage funds returned 0.42% in August against 4.75% for the year, followed closely by NZ Fixed
Interest with 0.41% for August and 4.45% for the year. International Fixed interest funds made 0.45% for the month of
August and 5.22% over the last 12 months.
International (Global) share funds were marginally down in August, at -0.76% while Regional funds were slightly lower at
-1.99%. However, over the last twelve months International Equity funds have delivered some truly impressive returns.
The average Global fund return for the last twelve months was 11.40%, and Regional funds were even stronger over the
same period with 15.29%. Australian Equity funds also had negative returns over August but for the last 12 months have
appreciated by an impressive 19.26%, just slightly below Australasian funds, which also invest in NZ Equities and
generated average returns of 20.18%.
Following is a summary of the main investment sector performances:
New Zealand Equity (Active) Unit Trusts
Overall, actively managed NZ Equity funds on average had a fourth consecutive month of positive performance in August
with an average return of 0.39%, down from 2.32% in July. Just over half the funds in this sector had positive returns,
going against the market trend, with the NZSX50 index down 0.18%. The top performing fund in this sector over August was
again the Fisher Funds Fledgling Fund with 3.69%, and over the last year the top fund was the ING Equity Selection Fund
with a return of 20.50%.
"While NZ sharemarket returns continue to weaken in line with our expectations, investors continue to enjoy the benefits
of active funds management skills” says Binu Paul, General Manager at FundSource.
International Equity (Global) Unit Trust
International sharemarkets were weaker in August, and together with a stronger NZ dollar led to weak fund returns where
there is an exposure to these markets. The average performance of Global funds in August was was -0.76%, a drop from
July’s 4.86%. Top performing funds in August included the Guardian Global Equity Fund which had a positive return of
0.77% for the month, bringing it to 14.28% for the last year. Three other funds which delivered positive returns in
August in spite of the markets were the TOWER GAM Global Gateway fund, the Asteron International Sharemarket Growth fund
and the Sovereign Spectrum Plus International Special Opportunities trust.
Globally sharemarket returns across August were slightly negative, with the MSCI World Free Gross (33%) Index falling
0.49% in NZ dollar terms. However, in local currency terms the MSCI actually rose marginally over August, and the
decline is primarily due to a 1.5% appreciation in the NZ dollar against the US over the month. Funds with higher
exposure to foreign currencies outperform when the NZ dollar depreciates, and the currency exposure often provides the
explanation for the diversity of funds’ performances in this sector.
Diversified Funds Returns from Diversified funds were also mixed in August, reflecting the performances of the markets
they invest in. Diversified Balanced funds returned -0.05% for the month, a fall from the +2.08% recorded in July.
Like the NZ Equity and International Equity sectors, there was a wide diversity in returns across funds. Despite this
recent dip, over the last year Balanced funds have returned 9.90% on average. Defensive funds returned 0.14% on average
in August, and Growth funds -0.34%. For the year to the end of August the returns for these sectors were 6.22% and
11.33% respectively.