The big get bigger

IPAC Securities general manager David van Schaardenburg says diversified, international equities and New Zealand equities recorded the strongest inflows in the quarter. On the other side of the ledger cash and mortgage funds experienced outflows of $102 million and $33 million respectively.

Another significant milestone this quarter is that it is the first time the total amount of funds invested in international equity funds ($1.19 billion) has exceeded local share funds ($1.16 billion).

Overall, van Schaardenburg describes the quarter's total funds flow of $389 million as "reasonable". It is a significant improvement on the net $124 million outflow recorded in the corresponding period last year, and is $203 million less than the total inflows for the previous quarter.

The slower rate of flow can be partly attributed to significant product rationalisation and continuing merger and acquisition activities going on amongst financial services firms. He says many firms are devoting resources to these management activities as opposed to raising funds.

Van Schaardenburg says net funds under management expanded by 3.6 per cent in the June quarter and grew 20.5 per cent over the last year. "The quarter's rise coming from steady performing equity markets and therefore modestly rising asset values, plus high positive net fund inflows."

Overall unit trusts continued to have positive net inflows ($265 million), while insurance bonds continued to see money flowing out the door. Super funds and group investment funds had positive inflows of $171 million and $22.7 million respectively.

Van Schaardenburg says a significant gap has opened up between the big firms and the others. He says the amount of net funds under management for each of the top 10 firms ranges from Tower at number one with $1.84 billion to WestpacTrust in 10th place with $892.8 million. The 11th ranked manager has only half as much money.

Also, the number of firms with more than $1 billion has doubled from four to eight in the past 12 months.

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