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Equities rally 'surprise'

The strength of equities over 2013 came as a surprise to many commentators, AON Hewitt says in its latest investment update.

Tuesday, March 4th 2014, 6:00AM

Its survey, which included fund managers ANZ, BT, First NZ Capital, Fisher Funds, Devon Funds Management and Harbour Asset Management, found the New Zealand equities manager average for 2013 was a return of 25.5%, compared to a NZX50 gross standard of 17.9%.

That was down slightly from 2012’s manager average of 28.1% but higher than the manager average for Australasian equities, at 19.5%.

Milford topped the table with a return of 30% on NZ equities, gross of tax and fees, followed by Brook (23.4%) and Devon (22%). 

Of the past five years, the worst for all the managers was 2011, when the best return was ANZ’s 4.9%.

The report said the strong equity rally over both 2012 and 2013 seemed to anticipate sustainable economic growth supporting improved consumer and business confidence.

In mid-2012 and early 2013, few were predicting how sustained the rally would be. But fears about the global economy were proved misplaced.

Worries about economic instability in Europe spilling over had not been borne out and concerns about the impact of US tapering died off once the tapering actually began, the report said.

“The NZ market has performed in line with most other markets. Interestingly, it has only matched the Australian equity market over this period, despite a much stronger domestic economy.”

The report noted losses on NZ bonds over 2013, as expected.

But it said investors should not shy away from them entirely. “Despite returns from bonds likely to be modest over the next three or so years, they should offset the expected volatility from equities over that period.”

The fund managers surveyed were also asked for their predictions for the coming five years.

They expect an average 8.7% per annum return over the next five years for NZ equities, and 6% over the current year. They expect international equities to fare slightly better and fixed interest to return 4.7% over five years and 2.8% this year.

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.49 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 ▼3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.65 3.59 3.99
The Co-operative Bank - Standard 5.15 4.15 4.09 4.49
TSB Bank 6.09 4.65 4.59 4.85
TSB Special 5.29 3.85 3.79 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 ▼3.54 3.99
Median 5.35 4.15 4.09 4.19

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