Adding value depends on local performance
Melville Jessup Weaver says the ability of managers to add value in their diversified portfolios depends on their success in NZ equity sector.
Wednesday, January 24th 2001, 4:57PM
The main features of the December quarter were:
- The local share market lost ground, largely influenced by Telecom's decline,
- Overseas share markets performed poorly amid fears of economic weakness in the US, down 7.0% in local currency terms,
- Fixed interest markets performed well, with the local and overseas markets returning 4.2% and 3.9% respectively,
- The NZ$ rebounded from its record lows, notably strengthening 8.9% against the US$, and
- The CPI rose 1.2% with price increases widespread.
The average return for the fund managers surveyed was -3.6%
Do Managers add value?
The evidence suggests yes they do but the results are very dependent on their success in the local share portfolio.
Proposed merger of the NZSE with the ASX
Of the nine managers surveyed, six were against (three strongly against), two were in favour but had reservations and one wanted more information.
Manager results for the last 12 months
- Alliance Capital (formerly AXA) - Their performance seems to have stumbled and the progress they were making earlier in the year has dissipated. Their income sectors have stronger performance than their growth sectors.
- AMP Henderson Global Investors - They added value in all sectors excluding the property sector and in their tactical asset allocation decisions. Their growth-oriented benchmark with its high exposure to passive funds saw a poor absolute return.
- Arcus Investment Management - They added good value compared to benchmark for the period with a particularly strong local share performance.
- Armstrong Jones - They produced the bottom return for the 12 month period due to poor performance from a growth oriented overseas shares manager. The market will watch with interest their response to this highly unusual ranking.
- ANZ Asset Management - Their passive asset allocation stance combined with good sector returns continues to deliver strong overall added value.
- BNZ Investment Management - Their local share performance is improving along with their tactical asset allocation decisions. The good return on active overseas shares had little impact on the fund monitored as most overseas share exposure was in passive shares.
- BT Funds Management - They have continued to add value as a manager. Their above average returns for local shares and asset allocation decisions helped offset the poor overseas shares result.
- Colonial First State - They achieved the best absolute performance for the period due to good performance in all the asset classes and their defensive strategy.
- GRT - Their performance has suffered due to their decision that all their share investments will be in passive funds.
- Guardian Trusts Funds Management - Their performance is still lagging behind the average.
- NZ Funds Management - They added the greatest value for the period, although their results in the last 2 quarters have been average.
- Tower Asset Management - They were the top absolute performing manager for the last quarter and third for the last 12 months. Their improved results are principally on the back of a change in fortunes for their value oriented overseas shares portfolio.
The objectives of the survey are:
- to provide a comprehensive review of each manager’s overall performance,
- to provide details of the value added by each manager, and
- to make observations on the performance of each manager.
The survey is aimed at sponsors and trustees of employer superannuation schemes, and trusts
generally.
|
Total Fund |
Asset Allocation |
|||||||||||||||||
|
Manager |
3 mths (%) |
1 yr (%) |
3 yr (%) |
5 yr (%) |
Manager |
3 mths (%) |
1 yr (%) |
3 yr (%) |
5 yr (%) |
|||||||||
|
ACM |
-1.4 |
(8) |
-1.0 |
(8) |
0.4 |
(6) |
0.1 |
(5) |
ACM |
0.0 |
(7) |
-0.4 |
(7) |
0.2 |
(5) |
0.3 |
(4) |
|
|
AHGI |
-1.6 |
(9) |
-4.0 |
(10) |
-2.0 |
(11) |
-1.3 |
(9) |
AHGI |
0.2 |
(4) |
-0.6 |
(8) |
-0.2 |
(6) |
-0.3 |
(7) |
|
|
AIM |
1.7 |
(1) |
3.0 |
(2) |
2.3 |
(4) |
n.a |
AIM |
n.a |
n.a |
n.a |
n.a |
||||||
|
AJ |
-2.4 |
(10) |
-3.0 |
(9) |
1.9 |
(5) |
2.2 |
(1) |
AJ |
-0.3 |
(8) |
-0.1 |
(6) |
0.2 |
(4) |
0.6 |
(1) |
|
|
ANZAM |
0.9 |
(4) |
2.8 |
(5) |
2.5 |
(3) |
1.8 |
(4) |
ANZAM |
0.2 |
(5) |
0.3 |
(4) |
0.6 |
(3) |
0.5 |
(2) |
|
|
BNZIM |
-0.2 |
(6) |
-0.7 |
(7) |
-0.6 |
(10) |
-0.3 |
(6) |
BNZIM |
0.5 |
(2) |
0.4 |
(3) |
0.8 |
(1) |
0.5 |
(3) |
|
|
BTFM |
0.0 |
(5) |
2.9 |
(4) |
3.3 |
(1) |
2.0 |
(3) |
BTFM |
0.0 |
(6) |
1.0 |
(1) |
0.7 |
(2) |
-0.1 |
(5) |
|
|
CFS |
1.5 |
(3) |
3.0 |
(3) |
-0.6 |
(9) |
n.a |
CFS |
1.7 |
(1) |
0.7 |
(2) |
-1.6 |
(8) |
n.a |
|||
|
GRT |
-3.9 |
(11) |
-5.0 |
(11) |
0.1 |
(7) |
-0.5 |
(7) |
GRT |
n.a |
n.a |
n.a |
n.a |
|||||
|
GTFM |
n.a |
n.a |
n.a |
n.a |
GTFM |
n.a |
n.a |
n.a |
n.a |
|||||||||
|
NZFM |
-0.6 |
(7) |
4.1 |
(1) |
2.6 |
(2) |
2.2 |
(2) |
NZFM |
n.a |
n.a |
n.a |
n.a |
|||||
|
TAM |
1.7 |
(2) |
2.4 |
(6) |
-0.5 |
(8) |
-0.5 |
(8) |
TAM |
0.4 |
(3) |
0.1 |
(5) |
-0.4 |
(7) |
-0.3 |
(6) |
|
|
Average |
-0.4 |
0.4 |
0.9 |
0.6 |
Average |
0.3 |
0.2 |
0.0 |
0.2 |
|||||||||
Notes: 1. The value added by a manager is shown for both the individual asset sectors and for tactical asset allocation decisions.
2. No figures are shown for GTFM as no benchmark asset allocations are available.
3. The asset allocation figures are the difference between the value added in total and that added for stock selection.
Table 3 - Actual Asset Allocation as at 31 December 2000
|
Manager |
NZ Shares |
Aus |
O'seas Shares |
Property |
Growth |
NZ |
O'Seas |
Cash |
Income |
Currency |
Currency |
||
|
Active |
Passive |
Shares |
active |
Passive |
Assets |
Fixed Int |
Fixed Int |
Assets |
Exposure |
Outlook |
|||
|
ACM |
13.0 |
7.1 |
0.7 |
13.3 |
16.9 |
7.6 |
58.3 |
21.0 |
9.6 |
11.1 |
41.7 |
18.4 |
Positive |
|
AHGI |
0.0 |
17.2 |
0.0 |
0.0 |
37.9 |
5.4 |
60.6 |
26.1 |
10.6 |
2.7 |
39.4 |
22.8 |
Positive |
|
AIM |
10.2 |
0.0 |
5.0 |
43.1 |
0.0 |
4.2 |
62.5 |
14.5 |
5.4 |
17.6 |
37.5 |
21.5 |
Neutral |
|
AJ |
18.7 |
0.0 |
0.0 |
35.7 |
0.0 |
9.7 |
64.1 |
12.6 |
14.3 |
9.0 |
35.9 |
21.1 |
Positive |
|
ANZAM |
5.5 |
9.5 |
2.8 |
36.8 |
0.0 |
5.0 |
59.6 |
22.7 |
12.2 |
5.5 |
40.4 |
18.5 |
Neutral |
|
BNZIM |
1.1 |
18.6 |
0.0 |
5.6 |
21.7 |
0.0 |
47.1 |
14.8 |
34.2 |
4.0 |
52.9 |
28.4 |
Neutral |
|
BTFM |
20.3 |
0.0 |
0.0 |
32.3 |
0.0 |
5.1 |
57.7 |
20.5 |
15.4 |
6.4 |
42.3 |
16.2 |
Positive |
|
CFS |
3.2 |
0.0 |
14.8 |
27.0 |
0.0 |
0.0 |
45.0 |
0.0 |
55.0 |
0.0 |
55.0 |
12.3 |
Positive |
|
GRT |
0.0 |
13.0 |
0.0 |
0.0 |
32.0 |
7.4 |
52.4 |
22.9 |
15.2 |
9.5 |
47.6 |
16.0 |
Neutral |
|
GTFM |
14.6 |
0.0 |
3.5 |
34.4 |
0.0 |
4.2 |
56.7 |
19.6 |
15.4 |
8.4 |
43.3 |
n.a |
Positive |
|
NZFM |
10.8 |
0.0 |
n.a |
35.4 |
0.0 |
3.2 |
49.4 |
22.2 |
13.7 |
14.7 |
50.6 |
18.4 |
Neutral |
|
TAM |
10.8 |
0.0 |
0.0 |
31.4 |
0.0 |
10.2 |
52.4 |
20.5 |
10.2 |
17.0 |
47.6 |
18.4 |
Positive |
|
Average |
9.3 |
5.4 |
5.9 |
24.6 |
9.0 |
5.2 |
55.5 |
18.1 |
17.6 |
8.8 |
44.5 |
19.3 |
|
Notes: 1. Shaded figures indicate an increased asset allocation since the previous quarter.
2. Growth Assets are the subtotal of shares and property.
3. Income Assets are the subtotal of fixed interest and cash.
4. Currency exposure is the percentage of total assets exposed to movements in the NZ dollar.
5.Currency Outlook represents the manager’s attitude to future movements in the NZ dollar.
Notes: 1. The value added by a manager is shown for both the individual asset sectors and for tactical asset allocation decisions.
2. No figures are shown for GTFM as no benchmark asset allocations are available.
3. The asset allocation figures are the difference between the value added in total and that added for stock selection.
4. All returns are per annum except those for the 3 month period.
| Funds involved in the survey | |
|
Manager |
Fund |
|
Alliance Capital (formerly AXA) |
EFG Managed Fund |
|
AMP Henderson Global Investors |
Superannuation Balanced Unit |
|
Armstrong Jones |
SIL Balanced Fund |
|
Arcus Investment Management |
Balanced Value Fund |
|
ANZAM |
Balanced Discretionary Fund |
|
BNZ Investment Management |
FLP Balanced Growth Fund |
|
BT Funds Management |
BTNZIS Balanced Fund |
|
Colonial First State |
Asset Growth Fund |
|
Guardian Trust Funds Management |
Composite Fund |
|
GRT |
Balanced Fund |
|
New Zealand Funds Management |
Low-Medium Growth Portfolio |
|
Tower Asset Management |
ILS Fund |
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