The shockwave which hit international equity markets three months ago has fed through into returns from managed funds, Morningstar said today.
Performance figures for the June 2000 quarter and year show poor returns from international equity funds, especially those investing in the ‘dot.com’ sector and emerging markets.
Last quarter’s star performer, for example, the HCM Global Technology Fund, only narrowly avoided being among the ten lowest-performing unit trusts for the June quarter. Over the year to 30 June, however, the Fund’s strong 63.43 percent net return reflected the strong performance of the tech. sector over the past year.
Emerging market funds, which provided among the highest returns over the March 2000 quarter, had a reversal of fortune in the June 2000 quarter. Three emerging markets international equities trusts – the Tower Spotlight Emerging Europe Fund, the WestpacTrust Emerging Opportunities Trust, and the National Bank Emerging Markets Trust – which were among the ten top-performers for the June 2000 year, were also among the ten lowest-performers for the June quarter.
New Zealand equity funds also suffered poor performance over the quarter, because of the prolonged lacklustre performance of the New Zealand sharemarket. The lowest-performing unit trust, the FMCI Toronto New Zealand Equity Trust, achieved returns of –17.41 percent and –19.69 percent for the June quarter and year respectively.
DETAILED ANALYSIS - UNIT TRUSTS AND GROUP INVESTMENT FUNDS
In general, funds which had a good year to 30 June 2000 had a poor June quarter, and vice versa. For example, three emerging markets international equities trusts (the Tower Spotlight Emerging Europe Fund, the WestpacTrust Emerging Opportunities Trust, and the National Bank Emerging Markets Trust) in the ten top-performers for the June 2000 year, were also among the ten lowest-performers for the June quarter.
New Zealand equity funds dominated the lowest-performing unit trusts and group investment funds over the quarter, reflecting the lacklustre performance of the New Zealand sharemarket. (The benchmark NZSE40 Capital Index returned only 0.37 percent for the June quarter.) Market-tracking index funds performed particularly poorly, taking six of the bottom 20 places.
Ironically, the highest-performing unit trust or group investment fund for the June 2000 quarter was the lowest-performing fund for the March 2000 quarter. The Royal & SunAlliance New Zealand Sharemarket Export Asia Fund achieved an 8.44 percent quarterly net return, whereas for the March quarter the Fund’s return was –8.71 percent.
The HCM Global Technology Fund was the highest-performing unit trust and group investment fund for the year to 30 June 2000 (as it was for the year to 31 March 2000). However, the HCM Global Technology Fund’s 63.43 percent net return for the year to 30 June was substantially less than its 103.82 percent net return for the year to 31 March. The Fund’s quarterly performance (11th lowest-performer) shows the impact of recent turbulence among the technology and ‘dot.com’ stocks.
The spread of quarterly net returns for the ten top-performing unit trusts and group investment funds ranged from the Royal & SunAlliance New Zealand Sharemarket Export Asia Fund’s 8.44 percent net return, to the National Bank New Zealand Equity Growth Trust’s 4.52 percent net return. The spread was substantially less than the March quarter, when the top ten returns ranged from 33.62 percent to 9.00 percent.
Over the year to 30 June, returns from the ten top-performing unit trusts and group investment funds ranged from the HCM Global Technology Fund’s 63.43 percent annual net return, to the National Bank Emerging Markets Trust’s 24.60 percent annual net return. (Over the year to 31 March, the spread of top ten returns was much wider, from 103.82 percent to 48.48 percent.)
Lowest-performing unit trust or group investment fund for both the June quarter and year was the FCMI Toronto New Zealand Equity Trust, with quarterly and annual net returns of –17.41 percent and –19.69 percent respectively.
The WestpacTrust Diversified Property Trust was the second-lowest-performing unit trust and group investment fund for the year to 30 June 2000, achieving a –11.95 percent net return. This compounded the Trust’s run of poor performance: it achieved the lowest return for the December 1999 quarter, and the lowest return over the year to 31 March 2000.
New Zealand Funds Management, which had six funds in the 20 top-performing unit trusts and group investment funds for the March quarter, experienced the exact opposite for the June quarter, with six funds in the bottom 20. Only the New Zealand Funds Management Global Blue Chip Share Fund scraped into the quarterly top 20, and then only into 19th position.
TOP 10 SUPER FUNDS
Three months to 30 June
1
Colonial First State Tasman Shares
7.78
2
AXA PRP NZ Shares (2)
7.31
3
AXA PRP NZ Shares (1)
7.30
4
Sovereign Super Intl Property Fund
7.02
5
Royal & SunAlliance Superplan2000 Trans-Tasman Fund
6.43
6
Royal & SunAlliance Superplan Trans-Tasman Fund
6.28
7
Sovereign Super Australian Fund
6.25
8
Royal & SunAlliance Superplan2000 Property Fund
5.96
9
Royal & SunAlliance Superplan Property Fund
5.85
10
Royal & SunAlliance NZ Property Fund
5.80
DETAILED ANALYSIS - Superannuation Trusts
All of the ten top-performing superannuation trusts for the June 2000 year were international equity funds, reflecting good performance from international equity markets until recent months. However, over the June quarter trans-Tasman equity funds, buoyed by the performance of the Australian sharemarket, took seven of the top ten spots.
The Sovereign Super Far East Fund was the top-performing New Zealand superannuation trust over the year to 30 June 2000, with a 43.85 percent net return. However, the Fund dropped out 20 top-performing superannuation trusts for the June quarter.
The worst-performing superannuation trusts for the quarter were generally those invested in Asia and emerging markets (seven of the ten lowest performers). Over the year, the lowest performers were generally funds investing in New Zealand large company equities, New Zealand property, and international fixed interest.
The Tower FreedomPlan Asia/Emerging Markets Fund was the lowest-performing superannuation trust for the quarter, producing a –8.38 percent net return. The Royal & SunAlliance Superplan New Zealand Large Companies Fund was the worst performer for the year, with a –5.88 percent annual net return.
The spread of quarterly net returns for the ten top-performing superannuation trusts was narrow, ranging from 7.78 percent for the Colonial First State Tasman Shares Fund, to 5.80 percent for the tenth-ranked Royal & SunAlliance New Zealand Property Fund. Over the year, returns ranged from the Sovereign Super Far East Fund’s 43.85 percent net return, to the Armstrong Jones SIL 60s+ International Share Fund’s 23.05 percent net return.
Royal & SunAlliance funds accounted for five of the ten lowest-performing superannuation trusts for the quarter, and seven of the ten lowest performers for the year. (Many of these Royal & SunAlliance funds, however, invest in the same pool of money.)
