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New Zealand equities managers outperformed in market recovery: MJW

Investors could be forgiven for finding the market returns of the June quarter hard to believe, actuaries MJW say.

Sunday, July 19th 2020, 9:54PM

Ben Trollip, MJW

The firm has released its investment survey for the three months, which shows that the local share market performed well, rising 16.9% compared to 18.5% for the global market when hedged to the New Zealand dollar.

The Australian market also posted good returns, up 20.7% in New Zealand dollar terms.

“The world remains steeped in battle with Covid-19 and the prospect of rolling lockdowns across many major economies looks possible. Although companies’ earnings are expected to take a once-in-a-generation hit and interest rates are at record low levels, financial markets are flying high. This quarter’s return from the US share market was the best since December 1998.”

The actuaries said that it was partly due to good timing – the market plummeted at the end of March, which made the June quarter a full three months of recovery.

“Nevertheless, we now have a stellar quarter in the history books. It remains to be seen what the rest of 2020 holds for financial markets.”

They said the anecdotes of couch traders pushing up the price of glamour stocks did not tell the whole story. The level of monetary and fiscal stimulus being pushed into the economy was “extraordinary”.

“Governments and central bankers have thrown everything they have at the crisis. This has seen appreciation in asset prices, despite continuing bad news about the spread of the virus.”

The performance had not been shared equally, though. Large stocks and tech stocks had benefited the most. Value stocks had lagged.

The median growth manager outperformed the median value manager in global equities by 7.1 percentage points in the quarter.

The median manager of core New Zealand shares outperformed the benchmark slightly, returning 17.3%, while median managers of Australasian and Australian shares (in New Zealand dollar terms) lagged.

Castle Point’s trans-Tasman fund was the star of the New Zealand funds, returning 25.4% in the quarter.

MJW said KiwiSaver was expected to have more than $70 billion under management by the end of 2020.

Tags: equities fund performance funds management investment KiwiSaver MJW

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