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Investment managers proving worth: Survey

Investment managers overseeing Australasian equities have paid for themselves over the past 20 years, according to AON Hewitt’s latest investment update.

Tuesday, February 19th 2013, 5:59AM 6 Comments

The survey has looked at investment performance relative to index since 1993.

It found that investment managers had more often than not beaten the index, and their performance in Australasian equities was more impressive than global equities.

“This shows that Australasian investment products have, on average, outperformed the NZX50 by a comfortable margin and definitely sufficient to, on average, cover management fees.”

Global equities’ average performance was just above the typical fee investors paid.

Since 2011, managers of overseas equities investment had outperformed the index but from 2007 until 2011, their returns were well below.  Australian equities, by contrast, had fewer dips below the index and from 1999 to 2002 and 2005 to 2010 strongly outperformed it.

Last year, the NZX50 returned 26% for the year while unhedged global equities returned 9.5%. Active equity managers achieved average returns of 27.4% and 11.5% respectively.

The New Zealand dollar strengthened over 2012, so hedged global equity funds would have delivered stronger results.

The survey showed that two of five active investment managers beat the NZ equities index last year, 11 of 19 beat the Australasian equities index and six of nine beat the global equities index.

Managers included in the survey include AMP, Brook, BT Funds Management, Harbour Asset Management, OnePath, Milford Asset Management and Tower Asset Management, among others.

« RFAs should be qualified: SurveyFund managers call for level playing field »

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Comments from our readers

On 20 February 2013 at 11:05 am Dave said:
Good to see some 'objective' commentary from an objective research provider rather than that provided by 'subjective' research providers such as Vanguard......
On 20 February 2013 at 4:15 pm Brent Sheather said:
Not so fast Dave. I have had a quick look at this “research” and there are major holes in the analysis including comparing hedged international funds with an unhedged index and problems with the choice of various indices. Best of all the returns from the fund managers appear to be before the deduction of fees. I might be a bit pessimistic but I didn’t think any of these “outperformers” offered their services for free! I will do a detailed analysis of AON’s efforts ….

One last thing Vanguard doesn’t pay me any fees – do fund managers pay you fees Dave? Regards Brent
On 22 February 2013 at 2:11 pm Bill said:
For once I agree with Brent

Our NZX50 holdings in 2012 as calculated by Aegis did over 30%

And can we have after fees comparisons please !!!!

Apples with apples too

And who paid for this research ?

I guess we know the answer.
On 22 February 2013 at 10:15 pm John said:
Hang on a second.....

Brent - Great insights thanks.

Can you provide me with a quick insight into your thoughts regarding the tax deductability of fees within different types of global equity funds (as obviously this will be important to NZ investors).
On 22 February 2013 at 10:39 pm waterfall said:
There were two sentences from the survey that caught my eye -

"This shows that Australasian investment products have, on average, outperformed the NZX50 by a comfortable margin"

and

"The survey showed that two of five active investment managers beat the NZ equities index last year"


Two of five active managers outperformed before fees?? Hmm, is this really a compelling case for active management... ???
On 23 February 2013 at 9:33 am brent sheather said:
Hi John,im not sure that this is different for any funds..management fees are deducted prior to the payment of distributions so they dont feature in the investors tax return..so the lower the fee the more money left for the investor.mgmt fees thus reduce dividends and tax but not much sense in losing $1 of dividends to save 30 cents of tax is there....

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AMP Home Loans $200k+ 7.14 5.89 6.29 6.55
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ 6.74 6.15 6.49 6.49
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ANZ Special - 5.75 5.99 -
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ASB Bank Special - - 5.99 6.19
BankDirect 6.75 6.09 6.99 6.65
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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
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First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 5.99 6.19
HBS Special - - - 5.89
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Heretaunga Building Society 6.70 6.00 6.50 -
Housing NZ Corp 6.74 5.99 ▲6.39 ▼6.59
HSBC Premier 6.84 5.95 5.95 ▼6.39
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HSBC Special - - - -
ICBC 6.75 5.99 6.39 -
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Kiwibank 6.65 5.99 6.39 6.65
Kiwibank - Capped 5.65 6.50 - -
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Liberty 5.64 - - -
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SBS Bank 6.15 5.85 5.99 6.19
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SBS Bank Special - - - 5.89
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