Relief for investors as managed funds recover

By MARK FRYER

The clouds have lifted a little for many managed fund investors, as improving returns continue to repair some of the damage suffered in recent years.

The latest figures from research company FundSource show that every category of fund it monitors produced a gain for investors in the 12 months to the end of September, after deducting ongoing management fees and tax.

Even battered international sharemarket funds limped back into the black - though only just.

Although some international share funds were down again in the latest 12 months, the average fund was up a shade - 0.38 per cent after fees and tax at 33 per cent. While hardly a stellar return, it provided some relief from the previous 12 months, when international share funds lost 20.5 per cent, or the 12 months before that (minus 22.6 per cent).

The latest year was kinder to New Zealand share funds. The average actively managed fund produced a return of 10.9 per cent and the average passive fund was up 13.85 per cent.

Longer term, local share funds also stack up well against their international counterparts. Over the past seven years, the local funds have earned investors 5.1 per cent a year (active) or 2.6 per cent a year (passive), compared with 2.4 per cent a year for international share funds over the same period.

Even safe-and-steady fixed interest funds have proven a better proposition than international shares over the longer term; New Zealand fixed interest funds rewarded investors with an average return of 4.6 per cent a year for the past seven years, while the average mortgage fund has paid 4.4 per cent a year over the same period.