Investment managers are struggling to add value in the offshore bond sector, consulting actuaries Melville Jessup Weaver says.
Tuesday, April 30th 2002, 7:49AM
March quarter features
· the CPI rose 0.6%, with domestic inflation running at 2.6%pa on an annual basis,
· the New Zealand share market outperformed most overseas share markets,
· Oil prices rose 30% reflecting escalating violence in the Middle East, and
· the NZ$ strengthened against major currencies, up 4.9% in trade weighted terms.
The average fund return was –0.5% for the quarter, compared to 2.0% for the year.
Do the managers add value?
The answer is that on average they do add value to the benchmark they are managing against. In our December survey we stated that this only applied for the local asset sectors. The comment now also applies to overseas share sector. The one exception where managers have struggled is overseas fixed interest.
Comments on each managers performance over last 12 months
Overall comment – The last 12 months was another year of low returns for balanced funds. There was considerably variation in the returns for the managers, varying from 7.1% to a negative 1.3%, a spread of 8.4%. As expected, the spread between the two managers who were top and bottom for the 12 month period reduced to 0.6% over a 5 year period.
Interestingly, over the 5 year period, the manager who was bottom in the current year beat the manager who was top in the current year.
For each manager:
· Alliance Capital Management - While the result for the total fund was disappointing, the results in all sectors except property were above average.
· Arcus Investment Management – The fund monitored continues to perform well. The one poor asset sector for the year was overseas shares.
· AMP Henderson – The results for the ‘A’ unit remain a disappointment. While their local fixed interest performance has slipped, the new local Strategic Equity Fund has done well.
· ANZ Asset Management – Despite repeated changes in personnel, they continue to add value against the benchmark of the fund monitored. This is consistently the case in respect of their passive stance to asset allocation decisions.
· BNZ Investment Management – Their high currency exposure of 36.5% of the assets of the Plan impacted adversely on their performance. Their 5 year results have held up.
· BT Funds Management –While their overseas shares performance has improved, their local fixed interest results have disappointed. Overall the fund monitored has been a steady performer.
· Colonial First State – Based on their results in the last year the move to Australia has been a success. Interestingly their overseas shares sector which
appeared before to be a problem has done well.
· GRT – .There 1 year results has been improved by the move to active local shares. They have recently included exposure to active overseas shares which will lead to more consistent returns overall for the Fund.
· Guardian Trust Funds Management – Poor share sector results have seen the result for their composite fund drop to last place for the 12 month period. They achieved top ranking in cash.
· ING – (formerly AJ) At the present time the only good news is their property sector performance. Hopefully the recent changes to the management of their local fixed interest and overseas shares will improve their results.
· TowerAssetManagement – Their return to achieving top quartile results over the last 18 months has been dramatic. Excluding cash the results in all the asset sectors are good.
· WestpacTrustInvestmentManagement – Their quarterly result showed some improvement in their performance.
· WMM – Over the period since the launch of their MRT fund, their results have improved. The impact of fees is seen when comparing the gross versus net results.
