Flows poor but confidence up

If you thought times were tough in the managed fund industry, you'd be right.

The amount of money flowing into managed funds for the March quarter is more than a third lower than for the previous quarter, according to research house IPAC Securities.

It says that net funds flow for the quarter was $217.7m compared to $331.0 in December.

But don't worry. ASB Bank says that investor confidence has rebounded sharply in the first quarter, and managed funds continue to be New Zealander's preferred vehicle for long term savings.

Nearly a quarter of the respondents in its investor confidence survey says that managed funds are likely to provide the best returns. At the other extreme residential rental property continues to lose favour and it drops to the lowers level ever since the survey began in May 1998.

IPAC Securities general manager David van Schaardenburg says negative international sharemarket performances during the December and March quarters are the main reason behind the fall off in net funds flow.

 Funds flows into international equity funds fell to $46.44 million for the quarter, from $147.53 million in the previous quarter. Net outflows occurred from diversified funds, property and New Zealand fixed interest funds. With diversified funds having their first net outflows fro the first time since March 1995.

"Turning the other way, the New Zealand cash sector had net inflows of nearly $47 million, the sector's first positive inflow since December 1998," van Schaardenburg says.

Consequently Macquarie moved into top spot for funds flow attracting $57.11 million. WestpacTrust had the second highest inflows, followed by NZ Funds, AMP and ASB Bank.

Of the 35 fund managers surveyed, almost half recorded negative net funds flow.