Funds manager still keen on global equities

By Felicity Anderson, Nzoom.com Business News Editor

Wednesday 17th October 2001

Funds manager AMP Henderson Global Investors (NZ) is warning investors about leaping too far from equities into fixed interest assets following the global adjustment to share prices after the September 11 attacks in the United States.

Chief Investment Officer Chris Wozniak says it is unrealistic to expect fixed interest markets to repeat the performance of the past year.

"Simply put, we think there are going to be a lot of disappointed investors in the market place if they try to chase the bumper bond returns of the last year," he says.

But apparently not all Kiwi investors are plunging into fixed assets.

Wozniak says the funds manager has been reassured by the sizeable funds flowing into its World Index New Zealand Fund (WiNZ) over the past two months.

"Over the last two months almost $50 million of new money has flowed into WiNZ, over twice the normal flow of around $10 million a month," Wozniak says.

He says those flows are in accord with AMP Henderson Global's belief that global equities are currently well priced, despite delivering a negative 31.2% return post the US attacks.

WiNZ was suspended from trading at AMPHG's request after the September 11 attacks waiting for information flows to be restored.

But Wozniak says when WiNZ reopened it was at a price higher than prior to September 11 and the value of the fund's share prices has been buffered for Kiwis by New Zealand's lower exchange rate.

The listed version of the WiNZ fund (the unlisted one targets superannuation funds) currently has investments worth $1.8 billion.

Wozniak says the equities mix in that includes about 65% US stocks and some in the United Kingdom, Japan and Germany.

While he describes a 1.5% - 2% yield on global equities in the past 12 months as a poor investment, Wozniak says investors who joined the fund when it was launched in 1997 at $1.09 a share have seen capital gain with the shares now at around $1.72.

The equities market has already seen a rebound since it plunged after the US attacks and AMPHG says that is in keeping with historical data after crisis such as World War II, the Vietnam War credit crunch, the 1970's oil shock and the 1987 crash.

Paul Dyer, Head of Investment Strategy for AMPHG, says markets bounce back after a global crisis.

"Over the last 50 years the US market has averaged 25.8% growth in the first year after a crisis and 37% growth over the first two years," Dyer says.

But AMPHG, which has $11 billion of funds under management for New Zealanders, also keeps fixed interest, cash funds and property assets in the mix.

Quarterly investment data AMPHG released on Tuesday shows fixed interest delivered an annual return of 9.8%, cash funds 6.6% and property 5.9%.

Wozniak says there is further growth potential in property.

The fund manager's typical property fund mix includes 40% commercial, 40% retail and 20% listed property shares, with a little bit of industrial at times.

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