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AMP chops passive international shares

UPDATED: AMP Capital is switching its benchmark for its diversified funds, chopping the allocation to passive global equities from 27% to zero.

Wednesday, April 18th 2007, 5:09AM

by Rob Hosking

The shift in emphasis is the most dramatic outcome of the change in offshore investment tax regime which began at the start of the month.

Head of Investment Strategy Leo Krippner says quite a few other players in the market seem to be waiting until the full range of investment and tax changes beds in over the course of the year – KiwiSaver in July and the portfolio investment entity regime (PIEs) in October – but that AMP has decided to begin the change now.

The asset allocation change relates just to AMP's balanced funds, it does not impact on the listed WiNZ product which has $455.8 million in funds under management.

AMP Capital's diversified funds invest in a fund called SuperWinz - size $2.6 billion which is in effect a Superannuation Fund and has no retail investors.

AMP’s previous benchmark has been 5% cash, 35% bonds, 5% New Zealand property, 5% global property securities, 15% New Zealand equities, 8% active global equities and 27% passive global equities.

Under the new regime active global equities will go from 8% to 35%, taking all the passive benchmark percentage, says Krippner

The only other change is a comparative tweak: New Zealand property gets an extra 2% from global property securities which drops to 3%.

Krippner says AMP Capital has had a more modest quarter than seen for some time – but this was expected after the highs of recent years.

The main surprises have been New Zealand property which has over performed – again – at a pre-tax and fee return of just under 8% for the quarter.

At the other end of the scale, the biggest disappointment was unhedged global shares, with a paltry 0.6% return prior to tax and fees.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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