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Panel goes for cash and intl shares

Last year was a shocker for investors with money in international shares because of the slowing US economy and the tech wreck. What will it be like for investors over the next 12 months?

Sunday, June 17th 2001, 10:47PM

by Philip Macalister

Managed fund research house Morningstar is predicting that the next 12 months maybe like the spring of a new investment year.

This will be welcome news after the massive falls in international sharemarkets last year. (To see what markets have done check out our new Market Review page here).

The head of Morningstar's expert asset allocation panel, economist Donal Curtin, says that there is a 60% chance that the global economy will have a soft landing over the next year.

The main reasons supporting this position are that central banks have been running monetary and fiscal policies which supportive of economic growth and have

However, there is also a 20% chance it will have a hard landing and a 20% chance it will recover very quickly.

The big turnaround in the panel's view is that six months ago it wasn't even considering that a quick recovery was an option.

ASSET CLASS

BENCHMARK

TACTICAL

DIFF

Cash

5

12.5

+7.5

NZ fixed interest

5

5

0

Aust fixed interest

5

0

-5

NZ equities

15

15

0

Aust equities

5

5

0

NZ property

5

5

0

Intl fixed interest

20

15

-5

Intl equities

40

42.5

+2.5

 TOTAL

100

100

 

Curtin says the major negatives are that the impact of the tech wreck have been under-estimated, the Japanese economy could fall further into recession and the wealth effect may wear off in the US.

Morningstar runs an asset allocation model that is designed for a 40 year old, medium risk investor. It is made up with a strategic asset allocation, that is like its benchmark. The asset allocation panel then makes strategic changes or "tilts" every three months. These tilts are designed to match the allocation to anticipated economic changes.

Currently the panel has opted for over-weighting its positions in cash and international shares, while under-weighting in fixed interest investments.

It has increased the cash holdings from 5% to 12.5% and international shares are up from 40% to 42.5%.

To compensate for these changes it has cut international and Australian fixed interest holdings by 5% each to 15% and 0% respectively.

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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Lender Flt 1yr 2yr 3yr
AMP Home Loans 6.99 5.99 6.29 6.60
AMP Home Loans $200k+ 6.89 5.89 6.19 6.50
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ ▲6.74 6.05 6.49 6.65
ANZ LVR > 90 ▲6.74 6.55 6.99 7.15
ANZ Special - - 6.09 -
ASB Bank ▲6.75 6.09 6.40 6.65
ASB Bank Special - 5.95 - -
BankDirect ▲6.75 6.09 6.99 6.65
BankDirect Special - 5.95 - -
BNZ - Classic - - - 6.25
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus ▲6.74 5.99 6.39 6.59
BNZ - Mortgage One ▲7.15 - - -
BNZ - Rapid Repay ▲6.74 - - -
BNZ - Std, FlyBuys ▲6.74 5.99 6.39 6.59
BNZ - TotalMoney ▲6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide ▲6.45 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 6.20 6.25
HBS Special - - - 5.95
Heartland 6.45 6.75 7.00 7.60
Heretaunga Building Society 6.25 5.85 6.50 -
Housing NZ Corp 6.50 6.00 6.30 6.60
HSBC Premier 6.59 5.95 5.99 6.25
HSBC Premier LVR > 80% - - - -
HSBC Special - 5.85 5.85 5.85
Kiwibank 6.40 5.99 6.29 6.29
Lender Flt 1yr 2yr 3yr
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.30 - - -
Kiwibank LVR > 80% - - 5.85 6.29
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society ▲6.95 ▲6.15 6.60 -
NZ Home Loans 6.35 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.06 7.38 7.82
RESIMAC LVR < 80% 6.34 6.06 6.38 6.82
RESIMAC LVR < 85% 7.34 7.06 7.38 7.82
Lender Flt 1yr 2yr 3yr
RESIMAC LVR < 90% 8.34 8.06 8.38 8.82
SBS Bank 6.15 5.85 6.20 6.25
SBS Bank Special - - - 5.95
Silver Fern 5.95 6.10 6.55 7.05
Sovereign ▲6.85 6.09 6.40 6.65
Sovereign Special - 5.95 - -
The Co-operative Bank 6.45 6.00 6.00 6.25
TSB Bank ▲6.74 6.00 6.19 6.60
TSB Special - - 5.80 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac ▲6.59 6.09 6.39 6.65
Lender Flt 1yr 2yr 3yr
Westpac - Capped rates - 6.49 6.99 -
Westpac - Offset ▲6.59 - - -
Westpac Special - 5.95 6.09 -
Median 6.54 6.00 6.39 6.60

Last updated: 29 July 2014 6:33am

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