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Morningstar plumps for growth

Despite the gloom Morningstar is favouring investments in growth assets such as international shares.

Friday, October 12th 2001, 3:51AM

by Philip Macalister

Morningstar's expert asset allocation panel is suggesting portfolios should be overweighted in growth assets following the terrorist attacks in the US last month.

In its fourth quarter economic briefing the panel has gone for modest overweightings in New Zealand, Australian and international shares, as well as New Zealand property.

The result is a 72.5/27.5 growth income split for its tactical asset allocation versus 65/35 for its strategic one.

In terms of income assets the panel has favoured cash over NZ fixed interest.

"New Zealand's short-term interest rates are still above those available from many fixed interest markets, despite the Reserve Bank's largely unanticipated 0.5% interest rate cut in the aftermath of the attacks in the US."

The panel is favouring the economic recovery scenario, as opposed to the doomsday one, and this is unlikely to be a congenial environment for fixed interest.

ASSET CLASS

BENCHMARK

TACTICAL

CHANGE

Cash

5

10.0

-2.5

NZ fixed interest

5

4

-1

Aust fixed interest

5

0

0

NZ equities

15

16

+1

Aust equities

5

7.5

+2.5

NZ property

5

6

+1

Intl fixed interest

20

13.5

-1.5

Intl equities

40

43.0

+0.5

 TOTAL

100

100

 

 

While the panel is modestly keen on growth assets its preferences lie close to home with an onshore/offshore split of 36/64 versus the strategic allocation of 30/70.

The panel says the weighting would be even more in favour of the local market if it included the Australian assets in that category.

This quarter it has removed the separate allocation to Australian fixed interest as not many New Zealanders invest in that sector. Also it has considered lumping NZ and Australian shares into one group.

It considered amalgamating the two share groups as many fund managers now run Australiasian share funds, there are broad similarities between the two markets, and there is the prospect that the NZSE and ASX will become one.

For the time being the panel has decided to have separate allocations to both markets.

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

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Lender Flt 1yr 2yr 3yr
ANZ 5.59 4.75 4.95 5.15
ANZ Special - 4.25 4.45 -
ASB Bank 5.65 4.69 4.99 5.29
ASB Bank Special - 4.29 4.49 4.79
BankDirect 5.65 4.69 4.99 5.29
BankDirect Special - 4.29 4.49 4.79
BNZ - Mortgage One 6.25 - - -
BNZ - Rapid Repay 5.70 - - -
BNZ - Special - 4.29 4.45 4.65
BNZ - Std, FlyBuys 5.64 4.85 4.95 5.15
BNZ - TotalMoney 5.64 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 5.95 4.99 4.99 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 5.60 4.85 4.90 -
Housing NZ Corp 5.55 4.69 4.75 ▲4.99
HSBC Premier 5.75 4.19 4.19 4.49
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.60 4.39 4.69 4.99
Kiwibank 5.25 4.70 4.75 4.75
Kiwibank - Capped - - - -
Kiwibank - Offset 5.25 - - -
Kiwibank Special - 4.19 ▲4.39 ▲4.75
Liberty 5.69 - - -
Napier Building Society 6.50 5.80 6.70 -
Nelson Building Society 6.10 4.85 4.99 -
NZ Home Loans 5.45 4.69 4.75 ▲5.00
NZ Home Loans - Specials - - - -
Lender Flt 1yr 2yr 3yr
NZ Home Loans - Specials - 4.19 ▲4.39 ▲4.75
Perpetual Trust 7.70 - - -
Resimac 5.19 4.94 4.90 4.91
SBS Bank 5.54 4.75 4.89 4.99
SBS Bank Special - 4.25 4.29 4.35
Sovereign 5.75 4.69 4.99 5.29
Sovereign Special - 4.29 4.49 4.79
The Co-operative Bank 5.45 4.39 4.45 4.79
TSB Bank 5.54 4.75 4.75 4.99
TSB Special - 4.25 4.19 4.59
Wairarapa Building Society 6.20 5.75 5.95 -
Lender Flt 1yr 2yr 3yr
Westpac 5.65 4.79 4.90 5.09
Westpac - Capped rates - 5.15 5.25 -
Westpac - Offset 5.65 - - -
Westpac Special - 4.25 ▲4.39 ▲4.75
Median 5.65 4.69 4.75 4.95

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