Master trusts: AMP, Tower and Westpac in the lead
Eriksen and Associates survey of wholesale master trusts for the December 99 quarter.
Monday, February 7th 2000, 12:00AM
The master trust market is developing steadily. AMP has announced the inclusion of an Armstrong Jones balanced fund in the NZRT. This is a welcome addition to the already strong investment management offerings in that fund. However the trustee fee charged by NZRT is also to increase. It brings small groups closer to the fees charged by retail savings products.
The three fastest growing master trusts are still AMP, Tower and Westpac. Mercer was invited to participate in the survey this quarter but declined.
The Labour Government has started off well by fulfilling its election promises to increase New Zealand Super and the maximum marginal tax rate. Higher paid individuals can protect part of their income by getting their employers to pay additional employer contributions to their superannuation scheme by way of salary sacrifice. The rate of SSCWT remains 49%.
The Government is still having trouble managing its bureaucrats. This was a real problem for the previous administration.
As a country New Zealand is running out of time to address the retirement savings problem. The baby boomers will soon be retiring en masse. Unless a solution is found in the next five years it will be difficult for a funded arrangement to be become mature enough to make a difference. For this reason we support Labour's proposed scheme.
We would prefer a voluntary TET regime under which there is a gross accumulation of investment income but the benefit is locked in to retirement age and must be taken in the form of an inflation proof pension which is surtaxed against New Zealand superannuation at the rate of 20 cents in the dollar up to 50 per cent. This generous tax incentive would help New Zealand to catch up to the other English speaking Western economies who have already funded their baby boomers retirements.
|
Fund Name |
Fund Size |
Annual Returns (Net of Tax & Expenses) |
No of |
|||
|
|
$ million |
1 Year |
2 Year |
3 Year |
4 Year |
Employers |
|
|
|
|
|
|
|
|
|
Growth Funds |
|
|
|
|
|
|
|
Colonial International Equities |
1.0 |
25.8 |
19.2 |
14.5 |
12.6 |
|
|
Jacques Martin NZ Growth Fund |
34.4 |
19.0 |
15.4 |
13.4 |
11.8 |
115 |
|
AMP High Equity |
73.6 |
16.1 |
15.8 |
14.3 |
12.4 |
492 |
|
GRT Individual Retirement Plan Growth |
7.1 |
14.5 |
12.9 |
11.9 |
10.4 |
|
|
Colonial Special Values |
2.3 |
13.7 |
10.3 |
9.4 |
9.7 |
|
|
Tower Focus NZ Shares |
3.2 |
13.5 |
6.0 |
5.5 |
8.1 |
115 |
|
Tower Focus International Shares |
12.9 |
13.3 |
13.1 |
14.1 |
12.6 |
118 |
|
Colonial Balanced Growth |
10.5 |
11.9 |
9.2 |
8.2 |
8.0 |
|
|
Tower BNZ Dynamic Growth |
0.1 |
11.4 |
|
|
|
1 |
|
Tower BT Managed Growth |
0.7 |
10.1 |
9.1 |
8.2 |
8.8 |
21 |
|
WestpacTrust Dynamic |
194.5 |
10.0 |
9.8 |
9.6 |
8.1 |
42 |
|
Colonial Australasian Equities |
0.2 |
9.8 |
5.3 |
4.4 |
5.7 |
|
|
Jacques Martin NZ Asset Growth |
12.0 |
6.9 |
|
|
|
115 |
|
Tower ANZ Growth |
0.1 |
6.4 |
|
|
|
11 |
|
All Growth Funds |
352.7 |
12.4 |
11.8 |
11.1 |
9.6 |
|
|
|
|
|
|
|
|
|
|
Balanced Funds |
|
|
|
|
|
|
|
Armstrong Jones SIL Balanced |
342.3 |
11.4 |
11.1 |
10.5 |
10.4 |
|
|
AXA NZ Spread Managers |
61.0 |
9.6 |
11.3 |
7.2 |
7.8 |
|
|
AMP Balanced |
363.5 |
9.2 |
10.1 |
9.6 |
8.8 |
691 |
|
GRT Individual Retirement Plan Balanced |
13.5 |
9.0 |
9.7 |
9.2 |
8.4 |
|
|
AMP BT |
22.6 |
8.7 |
8.5 |
7.5 |
8.1 |
292 |
|
AXA NZ Managed |
35.1 |
8.6 |
11.7 |
6.4 |
7.7 |
|
|
Royal & Sun Alliance Managed Fund |
90.6 |
8.3 |
8.8 |
8.3 |
7.8 |
32 |
|
WestpacTrust Balanced |
337.2 |
7.5 |
8.0 |
7.6 |
6.6 |
42 |
|
Jacques Martin NZ Balanced |
81.7 |
7.4 |
8.9 |
8.3 |
7.9 |
115 |
|
Tower BNZ Balanced Growth |
0.4 |
7.3 |
|
|
|
8 |
|
AXA NZ Balanced |
25.5 |
6.5 |
10.3 |
5.9 |
7.5 |
|
|
AMP ANZ Balanced |
61.5 |
6.1 |
7.3 |
7.3 |
7.7 |
429 |
|
Tower Investment Linked |
61.0 |
6.0 |
7.6 |
8.3 |
8.3 |
157 |
|
Tower ANZ Market Balanced |
0.1 |
3.9 |
|
|
|
8 |
|
All Balanced Funds |
1,495.9 |
8.8 |
9.5 |
8.8 |
8.4 |
|
|
|
|
|
|
|
|
|
|
Conservative Funds |
|
|
|
|
|
|
|
Jacques Martin NZ Capital Stable |
41.6 |
5.9 |
7.6 |
6.9 |
6.7 |
115 |
|
AXA NZ Low Risk |
22.4 |
5.3 |
8.8 |
5.6 |
7.4 |
|
|
GRT Individual Retirement Plan Stable |
2.2 |
4.9 |
7.2 |
7.0 |
6.7 |
|
|
AMP Capital Assured |
39.5 |
4.5 |
4.9 |
5.0 |
4.8 |
218 |
|
AMP Capital Stable |
50.0 |
4.5 |
6.1 |
6.0 |
6.0 |
246 |
|
Colonial Conservative |
1.9 |
4.1 |
4.9 |
4.1 |
4.5 |
|
|
AXA NZ Capital Protected |
27.5 |
3.8 |
4.2 |
4.1 |
4.3 |
|
|
Royal & Sun Alliance Deposit Fund |
32.8 |
3.3 |
4.2 |
4.4 |
4.8 |
17 |
|
Tower Focus Cash |
2.3 |
2.7 |
3.7 |
4.0 |
4.6 |
82 |
|
WestpacTrust Accumulation |
59.0 |
2.7 |
4.7 |
4.5 |
4.7 |
42 |
|
Jacques Martin NZ Cash Management |
5.8 |
2.3 |
3.5 |
4.2 |
4.6 |
115 |
|
Tower BNZ Conservative |
|
1.1 |
|
|
|
|
|
Tower ANZ Capital Stable |
0.3 |
0.5 |
|
|
|
1 |
|
Colonial Global Fixed Interest |
0.4 |
0.3 |
4.2 |
5.4 |
5.2 |
|
|
Tower Focus Fixed Income |
3.9 |
0.2 |
4.6 |
4.7 |
4.9 |
89 |
|
All Conservative Funds |
289.5 |
4.1 |
5.6 |
5.2 |
5.4 |
|
|
|
|
|
|
|
|
|
|
Total Funds |
2,138.0 |
8.8 |
9.4 |
8.7 |
8.2 |
|
|
|
|
|
|
|
|
|
|
Cash Benchmark (Net) |
|
3.3 |
4.0 |
4.4 |
4.9 |
|
|
CPI |
|
0.5 |
0.4 |
0.6 |
1.1 |
|
|
|
|
|
|
|
|
|
The investment returns for the last quarter of the 20th century were excellent thanks to the continued growth in the US market and investor confidence. The New Zealand stock market was fairly flat but selected equities performed well during the quarter. However on an annual basis the returns for the year ending 31 December 1999 were a little lower than those for the previous quarterly survey. The real rate of return on average after tax and inflation has dropped to 8.3%, which is still an extremely good result.
Growth funds with high exposure to equities led the way with an average return of 12.4% net. Balanced funds achieved 8.8% net which is the same as the total average but low risk funds yielded just 4.1%. This is only 0.8% above the cash rate.
The global economy has moved forward steadily this year without the fears of Y2K problems. The fact that Y2K appears to have been a non-event boosts investor confidence and encourages consumers. None the less the global stock markets, and the US market in particular, are still volatile. The US market although it achieved record highs earlier this year has fallen back to between the 10,500 and 11,500 levels which suggest a little more stability.
The central banks are increasing interest rates to reduce demand and control inflation. The Federal Reserve announced another 0.25% increase in rates last week. Australia earlier raised theirs by 0.5%.
Reserve Bank governor Don Brash has already raised his cash rate by one quarter of a percent, which puts the New Zealand economy more under pressure. By applying the brakes early he risks reducing the growth we had been enjoying recently possibility tipping it the other way. The Labour Government with its increase in the State Pension will boost the rate of spending since the elderly tend to spend rather than save their incomes.
Recently the Bank Of England sold another 25 tonnes of gold. This was well anticipated by the market and the gold price barely flickered. It is currently around the $US280 mark and still has the stronger upside than down side. The other commodity whose price is holding up well is oil. With a relatively cold European winter OPEC has had no trouble extracting its price from the oil companies and consumers in the Western World.
The New Zealand dollar has dropped to about 50 cents US. Don Brash has acknowledged that his monetary policy cannot control the exchange rate. New Zealand and Australia are being lumped in together and our currencies are at the mercy of off shore investors.
The lower New Zealand dollar will benefit exporters. The problem is to try and reduce the current account deficit. As a country used to spending more than we save this is difficult.
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