by Jenny Ruth
AMP Henderson's returns for the latest quarter and for the year ended June look positively ghastly because of the turmoil in global equities markets.
Although it achieved positive returns from just about all other asset classes during the the quarter and the year, the net quarterly and annual returns for all its managed funds are negative.
They range from a negative 2.1% return from its low risk fund for the quarter and negative 2.7% for the year ended June to negative 10.4% for the quarter from its high risk fund for the quarter and negative 17.3% for the year.
Its actively managed global equities portfolio produced a negative 12.5% return in the latest quarter, bringing its return for the year ended 30 June to negative 24.6%.
The fund manager's passively managed global equities portfolio, which mirrors selected indicies, fared better in the latest quarter with a negative 18.3% return but worse for the year with a negative 31.3% return.
Nevertheless, chief investment officer Chris Wozniak suggests now is just the right time to be investing in global equities.
In the US for example, two years ago returns from equities were the equivalent of bond returns, despite equities being inherently more risky. "In the late 1990s, it got to the point where investors regarded equities as almost a risk-less asset class."
But the crash in share prices means "you're getting the biggest premium (over bonds) to invest in equities since the late 1980s," Wozniak says.
He hastens to say that doesn't mean equity prices can't fall further. "But you're now actually paid substantially to take the risk."
The recent market performance has also been at odds with the actual underlying performances of global economies - most OECD countries have experienced two consecutive quarters of economic growth, Wozniak says.
And what were AMP's best performing asset classes? Global fixed interest produced a positive 3.9% return for the quarter and an 8.8% return for the year. Property, which produced a positive 1.9% quarterly return, achieved a 9.8% return for the year.
Wozniak says fixed interest investments will provide relatively low returns going forward and recommends the contrarian approach: sell what has been performing best, buy what has been performing worst.
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