Morningstar Wraps Up Research on Investment Strategies

Morningstar Wraps Up Research on New Zealand and Australasian Investment Strategies

Morningstar today released its sector wrap-up for New Zealand and Australasian investment strategies, covering 16 individual strategies. Morningstar does not charge or accept payment from fund managers to participate in qualitative research reviews.

"It's been an eventful 12 months for the New Zealand funds management industry," said Morningstar Co-Head of Fund Research Chris Douglas. "There's been a substantial amount of change in corporate ownership and personnel. The NZX50 and S&P/ASX200 share indices also reversed long-term trends, our local market delivering a defensive return while Australia struggled on the back of global economic instability."

Key Findings
• Only one strategy was designated 'Highly Recommended', Harbour Australasian Equity, which retained pole position from our previous assessment of New Zealand and Australasian share strategies.
• AMP Limited's acquisition of AXA Asia Pacific was the major corporate development over the past 12 months. New Zealand funds management firms have also focused on building their Australian equities and fixed interest capabilities.
• Several commentators have questioned the capacity of the local sharemarket to absorb KiwiSaver inflows. Our analysis suggests that this is unlikely to be an issue, with inflows low relative to trading volume and total market-cap. We also find a trend of increased allocation to the Australian sharemarket over the past three years despite that market's recent weaker performance.
• In the aftermath of the global financial crisis, New Zealand fund managers have been increasing the number of stocks in their portfolios, and cutting their allocations to cash, both trends suggesting greater appetite for market risk.
• Analysis of underlying portfolio stockholdings suggests that there may be merit to holding more than one New Zealand or Australasian share fund, as long as investors and advisers assess and understand the implications in terms of holdings overlap and its effect on portfolio diversification, and monitor this on an ongoing basis.

ENDS

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