Fund flows improve, but still negative

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Funds flow into managed funds improved in the March quarter, bolstered by KiwiSaver, however the overall picture isn't particularly flash.

Wednesday, May 7th 2008, 5:44AM

On an annual basis net fund flows totaled a negative $1.276 billion, which is the largest outflow the industry has seen on a rolling 12-month basis since June 2001.

"The past 12 months have been really challenging for the managed funds industry, with some big legislative changes, the roll-out of KiwiSaver and of course the fallout from the international credit crunch," FundSource business manager Darren Chin says.

"Performance also affects funds under management and with all the uncertainty in global markets, growth assets such as shares have taken a bit of a hammering. Yet, as some of the more savvy investors may realise, this also presents some real opportunities."

The two positive categories in March were KiwiSaver and group investment funds, with KiwiSaver increasing by $127.1 million to stand at $353 million. (The FundSource figures do not capture all KiwiSaver funds).

"With an ever growing number of New Zealanders embracing KiwiSaver as part of their long-term savings strategy, the KiwiSaver funds are really starting to have an impact on the industry, and these funds will only continue to grow," Chin says.

On the other side of the ledger Australian unit trusts and insurance bonds both experienced outflows.

Looking at the figures from the perspective of asset classes money continued to leave the Australasian equities, local property and mortgage sectors, international regional shares, global equities and fixed interest asset classes.

Amongst the KiwiSaver funds, diversified trusts experienced the strongest inflows, followed by cash.

There is some good news for managers this quarter. Fourteen of the 30 surveyed reported inflows for the March quarter, compared to just six in the previous quarter.

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