"A strengthening NZ dollar depresses the value of our overseas investments and as such, funds in those sectors have suffered from it, even though the underlying assets continued to gain in value over the month," FundSource general manager Binu Paul says.
Managed funds in the international equity (global) sector, arguably the most exposed sector to currency movements, fell 3.9% on average for the month of June, pulling one year returns down to 1.0%. Annualised three year returns however remain strong at 8.0% after tax and fees, Paul says.
Diversified funds also suffered for the month, with diversified growth funds falling 1.4% on average over June, Diversified balanced funds falling 1.5%, and diversified defensive funds falling 0.6%. All three sectors continued to experience positive returns for the June quarter.
The actively managed New Zealand share, while not as directly affected by currency movements, followed the benchmark NZX50 index down in June. This sector, along with passive funds and Australasian funds averaged falls of negative 2.1%, 1.9% and 0.9% respectively. However, annual returns (after tax and fees) remain impressive for these sectors, coming in at 11.3%, 16.3% and 10.6% respectively over the one year period.
Meanwhile the property sector gained the most over June, averaging a positive 3.3% for the month, bringing the sectors' one year returns to 18.6%. Among the income asset funds, the mortgage sector returned 0.4% for June, local fixed interest lost 0.2% and cash returned 0.4%. These sectors have returned 5.1%, 1.3% and 4.5% over the one year period to June respectively.
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