Red ink for NZ fund managers

By Phil Boeyen, ShareChat Business News Editor

Wednesday 24th October 2001

Market declines following the September US terrorist attacks have shown up strongly in the latest quarterly survey of New Zealand wholesale superannuation fund managers.

The Mercer Investment Consulting survey for the three months ended September shows overseas shares posted a negative 15.4% return in NZ dollar terms during the period while New Zealand shares fared little better with a return of negative 9.9%. All other sectors produced marginally positive returns for the quarter.

"Equity markets worldwide suffered further volatility in the wake of the tragic events of September 11," says Louis Boulanger, executive director of Mercer in New Zealand.

"Over the past six months, investors' expectations of the US economy have vacillated between hope for a subdued recovery and fears of a deeper slowdown."

Mr Boulanger says the return of the median manager for the September quarter was negative 6.3% before tax and fees.

"Performance was adversely affected across the board, but Tower Asset Management achieved the highest return for the quarter of negative 4.5%. This was largely due to their exposure to overseas shares being lower than average and their overall lowest exposure to New Zealand shares."

Results for the year ended September show returns ranged between a gross negative 1% return from Tower Asset Management to a negative 13.8 % return from Armstrong Jones.

The median for the twelve months was negative 8.9 % before tax and fees.

"Negative returns are now a reality for all of the New Zealand fund managers in our survey for the past twelve months," Mr Boulanger says.

Compared to three years ago fund managers are now putting a lot more money into overseas equities, increasing their allocation by an average 13% during the period.

Overseas fixed interest has also become more popular in the past five years, rising from an average allocation of 8.2% in 1996 to 18.1% in the recent survey.

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