|        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, May 23rd, 2:32PM


Investment News

Managed Funds find favour as conditions change

Announcements regarding taxes and regulation and changing market dynamics have seen investors placing increased confidence in managed funds, according to the latest ASB Investor Confidence report.

Friday, April 28th 2006, 11:16AM
When asked: What type of investment gives the best return?
While residential rental property remains the highest ranked asset class, it dropped four points to 20%. The big change in the first quarter of 2006 was managed funds, up seven points to 16%.

"The last few months have seen an increase in confidence amongst people invested in managed funds, and rightly so," says Jonathan Beale, Head of Investment Services ASB Investments. "The New Zealand dollar began its drop against major currencies in the last quarter, while local and international equities performed well, increasing the desirability of managed funds."

The performance of ASB's Balanced, Growth and Dynamic Strategy Funds, which have exposure to both local and international equity markets, reflects the type of performance that appears to be attracting investors. The Balanced, Growth and Dynamic Strategies returned 5.45%, 7.01% and 9.94% respectively for the period.

"The interest rate increases from the Reserve Bank pushed mortgage rates up, while median house price growth slowed, and the number of days to sell a house increased, impacting the yields and capital gains for rental properties," said Beale.

"Recent announcements regarding capital gains tax changes will make managed funds even more competitive and it seems likely investor sentiment will continue in this manner over coming quarters."

When splitting investors by region and asking them what investment gives the best return between residential rental properties and managed funds, there were some interesting results.

"While investors in the upper and lower North Island mirror the overall results in the report closing the gap in confidence in residential rental property and managed funds, South Islanders have completely changed their stance, with managed funds now by far the preferred investment to get the best return."

"It is unclear at this stage what is driving this change in confidence. South Islanders have typically been more conservative when it comes to investment returns, but the change in confidence this quarter has been surprising."

When asked: Do you expect your net return from investments this year to be better or worse than last year?
Confidence amongst investors that investments will perform better this year than they did last year has dropped to a net 9%, the lowest point since the first quarter of 2003.

"We have been surprised in previous reports with the levels of optimism amongst investors for even higher returns than they have seen in recent years," says Beale. "A more pessimistic outlook from investors is probably a reflection of the general market sentiment that we are experiencing a slowdown in the economy. The double digit performance seen in many asset classes over the last few years couldn't go on for ever."

When asked: How confident are you in your current main investment?
Findings when asking people about their own investments were similar to those about investments in general. Confidence in managed funds surged up 18 points to 57%, while residential rental properties dropped one point to 60%.

"People are generally pretty confident in their main investment," says Beale. "The jump in confidence for people with managed funds is warranted as, in general, managed fund performance over recent times has been very good. This measure does tend to fluctuate over quarters as performance ebbs and flows, but reinforces the adage that with managed funds it is time in the market, not timing the market that provides good performance.

"At the moment the difference in confidence between people who use investment adviser (42%) and those who don't (32%) is relatively static. It is likely to change in favour of those using investment advisers as market conditions become more difficult, and with changes to tax around investments and regulation."

« Follow-the-market not necessarily the best approachMarket Review: (Almost) boring »

Special Offers

Commenting is closed



Printable version  


Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

Edison Investment Research
  • Gresham House Energy Storage Fund
    20 May 2024
    Focused on revenues and project completions
    Gresham House Energy Storage Fund (GRID) invests in utility-scale battery energy storage systems (BESS) in Great Britain. GRID and its peers saw sharp...
  • BB Biotech
    20 May 2024
    A recovering sector with a healthy prognosis
    BB Biotech (BION) offers investors exposure to the innovative, rapidly expanding biotech sector. It is the largest biotech investor among its investment...
  • Henderson Opportunities Trust
    15 May 2024
    A differentiated exposure to smaller companies
    With a focus on long-term growth, Henderson Opportunities Trust (HOT) seeks investment opportunities across the breadth of the UK market. This includes...
© 2024 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Rabobank 5.25  
Based on a $50,000 deposit
More Rates »
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
Site by Web Developer and