In its latest quarterly Investments Forecasts survey managers have bumped up their return expectations for all asset classes except New Zealand shares.
The expectation, on average, is that the local equity market will return 12.8 per cent in the next 12 months, compared to an expected return of 15.3 months at the end of the March quarter.
Despite a 2.5 per cent fall, New Zealand shares remain the asset class with the highest expected return over the next 12 months.
Fund manager expectations appear to be at odds with what sharebrokers are saying. In a survey published by the New Zealand Herald yesterday brokers predicted the NZSE 40 will be somewhere between 2200 and 2300 by the end of the year. Of the eight firms surveyed UBS Warburg was the most bullish (2300) while Ord Minnett was the bear (2200).
On average sharebrokers are expecting the index to be at 2240 by December 29. (The market closed at 2100 yesterday).
|
Asset class |
Expected average return over next 12 months |
Change from last quarter |
Expected five year returns |
|
Cash |
7.0 |
+0.2 |
6.2 |
|
Fixed interest |
7.0 |
+0.2 |
6.8 |
|
Property |
8.2 |
+0.6 |
8.4 |
|
Equities |
15.3 |
-2.5 |
11.2 |
|
Intl fixed interest |
6.5 |
+0.5 |
6.1 |
|
Intl equities |
8.3 |
+1.8 |
10.7 |
|
Inflation rate |
2.4 |
+0.3 |
2.0 |
Source: Aon Consulting
The other two big movers in the Aon survey were international shares and property.
Forecast returns for international shares has risen 1.8 per cent to 8.3 per cent, yet it is still well below the five year forecast of 10.7 per cent.
Property expectations have been like the sector - volatile. Three months ago return expectations had fallen a full one percent, now they have been bumped up 0.6 per cent.
The 10 managers surveyed are AMP Asset Management, ANZ Funds Management, Armstrong Jones, AXA, BNZ Financial Services, BT Funds Management, Guardian Trust Funds Management, New Zealand Funds Management, Tower Asset Management and WestpacTrust Investment Management.
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