AMP expects slowdown ahead

The country's biggest fund manager, AMP Capital Investors, yesterday said it was getting ready for an economic slowdown after a two-year "dream run" for its diversified funds.

At a briefing in Wellington, AMP reported a gross return of 4.9 per cent for the quarter ended December 31 for its medium risk diversified fund - and 11.7 per cent for the year.

The standout sector was hedged global property, with a 41.4 per cent return for the year.

Shares did well, with New Zealand equities returning 26.7 per cent and global equities 16.7 per cent.

AMP's low-risk diversified fund returned 3.5 per cent for the quarter, and 9.2 per cent for the year, while its high-risk diversified fund returned 7.5 per cent for the quarter and 16.4 per cent for the year.

Chief investment officer Tore Hayward said he did not expect diversified funds to perform as well in 2005.

AMP was moving money around, getting ready "for an eventual slowdown in the New Zealand economy relative to the rest of the world".

Hayward said AMP had shifted money from asset classes that had been out-performing those expected to post better returns in the changing environment.

He expected global equities to start outperforming New Zealand equities this year. For its balanced superannuation fund, AMP has shifted 1 per cent of New Zealand equities into global equities, 5 per cent of global bonds into New Zealand bonds and reduced currency hedges by 1 per cent.

Hayward said exposure to global property was under the spotlight and a decision was still being made about whether money in that asset class should be trimmed.

AMP was also looking at its currency hedges, with the expectation the New Zealand dollar could fall up to 5 per cent this year.

- NZPA