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Investment News

Rough quarter for managed funds

Funds flow into retail managed funds looked weak in the September quarter, but overall inflows held up reasonably well for the year in the face of falling markets and terrorism attacks.

Monday, December 10th 2001, 10:37PM

Research house Morningstar says funds flow halved from $303.7 million in June to $116.2 million in the most recent quarter.

This fall-off contributed substantially to a lower annual inflow of $879 million in the 12-month period compared to nearly $1 billion in the corresponding period in 2000. While the September quarter was down 50% on the earlier one, the funds flow for the year was down 11%.

Undoubtedly the events of September 11 had a significant impact on funds flow. These events also seem to have had an impact on where investors placed their money in the latest quarter.

According to Morningstar New Zealanders have a huge, unsated, appetite for mortgage funds.

This sector attracted the highest inflow in the year to September weighing in at $383.7 million, $125.4 million higher than in 2000.

His flood of money has created to major winners: The WestpacTrust Home Loan Trust and ASB Bank's Residential Mortgage Trust.

The second most popular group of funds over the year has been what Morningstar calls NZ Miscellaneous Trusts.

International equity and cash management trusts came in third and fourth place respectively. CMT's have been bolstered by the performance of the Macquarie Gilt Edge Access account which acts as a conduit for Money Managers' highly popular First Step Mortgage trust. (Figures from Good Returns' survey of UK Open Ended Investment Companies and Australian based funds shows that Money Managers First Step now has total assets of $219 million, and it attracted inflows of $39 million in the September quarter alone).

Where the money went (Yr to Sept 30)

Rank

Category

Net flow ($mill)

1

Mortgage trusts

$383.7

2

Miscellaneous trusts

246.20

3

Intl equity - general

169.70

4

Cash

145.70

5

Multisector sector - growth

92.30

6

Intl equity super - general

84.70

7

Intl fixed interest

64.40

8

Intl managed futures

42.90

9

NZ fixed interest

34.30

10

Multisector - growth

25.40

Source: Morningstar

Morningstar says the traditional stranglehold the trading banks have over funds flow has been challenged by New Zealand Funds Management and Tower which took second and third places respectively in the September quarter.

These two firms and WestpacTrust had flows which were considerably ahead of what fourth placed National Bank achieved. However, there were also "some relatively unfamiliar faces among the top 10" including Equitable and Fisher Funds Management filling the 9th and 10th places.

Overall though AMP remains number one in total assets under management with a total of $2.7 billion, $300 million more than the combined ASB/Colonial First State group.

Who got the money (Yr to Sept 30)

Rank

Category

Net flow ($mill)

1

NZ Funds other unit trusts

$246.20

2

WestpacTrust Home Loan

211.70

3

ASB Residential Mortgage

139.40

4

Macquarie Gilt Edge

111.60

5

AMP PRP - Balanced

57.30

6

AMP PRP - Passive Intl

55.80

7

ANZ FlexiMortgage Income

49.90

8

Tower Tortis Intl

47.40

9

Tower GAM Multi-Trading

43.70

10

AMP PRP Dynamic

40.10

Source: Morningstar

AMP is responsible for about 15% of the New Zealand retail managed funds market.

While there is good news for a number of the predominantly large managers, there is bad news for the rest of the industry.

"Most retail funds managers' net assets went backwards over the September quarter," Morningstar says. (For full League Table click here).

Only six of the 38 retail fund managers in the Morningstar report experienced growth in net assets in the September quarter.

The most popular type of managed fund
Unit trusts continue to be the biggest and most popular type of managed fund investment accounting for nearly 45% of the market. Superannuation trusts are next most popular with 39%.

Insurance bonds continue to be the weakling of the market, accounting for 6.3% of net assets.

"(There is) no respite for insurance bonds from the drearily familiar trend of outflows with another $54.4 million leaving this product type over the September quarter."

Morningstar says during the year insurance bonds have suffered net outflows of $224.6 million and $316.6 million this year and last year respectively.

Three managers, AMP, Royal & SunAlliance and Sovereign account for 70% of the funds in this sector. The only two managers in September to record positive inflows were ANZ and Sovereign.

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Institution Rate 33% 39%
ANZ Term Fund - 90 days 3.00    3.08    3.22
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ASB Bank Term Fund - 9 months 4.00    4.18    4.37
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BNZ Term PIE - 150 days 3.30    3.38    3.53
BNZ Term PIE - 5 years 5.30    5.58    5.83
BNZ Term PIE - 2 years 4.40    4.60    4.81
BNZ Term PIE - 18 months 4.20    4.40    4.59
BNZ Term PIE - 12 months 4.10    4.18    4.37
BNZ Term PIE - 9 months 3.80    3.97    4.14
BNZ Term PIE - 6 months 3.80    3.97    4.14
BNZ Term PIE - 90 days 3.00    3.08    3.22
Co-operative Bank PIE Term Fund - 6 months 4.00    4.11    4.30
Heartland Bank Term Deposit PIE - 12 months 4.35    4.54    4.74
Kiwibank Term Deposit Fund - 90 days 3.30    3.38    3.53
Kiwibank Term Deposit Fund - 6 months 3.75    3.85    4.02
Kiwibank Term Deposit Fund - 12 months 4.10    4.20    4.41
Kiwibank Term Deposit Fund - 150 days 3.60    3.70    3.86
Kiwibank Term Deposit Fund - 120 days 3.30    3.38    3.53
RaboDirect Term Advantage Fund - 12 months 4.00    4.11    4.30
RaboDirect Term Advantage Fund - 6 months 3.85    3.96    4.14
RaboDirect Term Advantage Fund - 90 days 3.25    3.34    3.49
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Westpac Term PIE Fund - 120 days 4.00    3.34    3.49
Westpac Term PIE Fund - 18 months 4.30    4.32    4.51
Westpac Term PIE Fund - 12 months 3.85    3.96    4.14
Westpac Term PIE Fund - 6 months 3.75    3.86    4.03
Westpac Term PIE Fund - 9 months 3.80    3.90    4.08
Westpac Term PIE Fund - 90 days 3.00    3.09    3.22
Westpac Term PIE Fund - 2 years 4.75    4.52    4.72
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