Low interest rates help term deposits take a tumble
The low interest rate environment has helped push term deposits from their number one spot as the investment most New Zealanders believe offers the best returns.
Tuesday, May 22nd 2012, 12:01AM
by Benn Bathgate
The latest ASB Investor Confidence Survey found rental property has overtaken term deposits as the asset class which will offer the best returns.
ASB head of wealth advisory Jonathan Beale says the change in investor sentiment - largely driven by low interest rates - was best exemplified by the third-placed investment class, managed investments and superannuation.
“Managed investments and superannuation have soared four points to 13%, their highest level in four years. Shares have also been climbing every quarter since Q3 2010, now fourth equal with KiwiSaver which is steady at 10%,” he said.
“The low interest rate environment seems to be influencing investor perceptions markedly. Investors appear to be moving away from the traditionally lower risk investment options and searching for those with the potential for higher returns.”
Beale also cited the performance of managed funds over the past three years as a factor for their increased popularity as an investment class.
He said even investors with a conservative risk profile have been seeing returns after tax of around 6%, compared to term deposit’s offering “four-and-a-bit” percent.
“This is a turnaround from the flock to caution we saw in the midst of the financial crisis, but unsurprising after the performance of share markets and managed funds as markets improved in the first few months of 2012.”
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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