Funds have a ball but did investors miss the bounce?

Photo / Bay of Plenty Times

TJ Singh from the NZX-owned research house FundSource dropped me an email this week trumpeting the stellar returns achieved by New Zealand fund managers in the 12 months to December 31 last year.

According to Singh, the average New Zealand equities manager returned a handy 30 per cent last year, a figure which jumped to 39 per cent if they also invested in Australian shares (an increasingly common phenomenon).

Even amongst the top 10 funds in the researchers list, however, there was a wide disparity in returns with the little-known Auckland-based boutique shop, Pie Funds, returning almost 105 per cent to investors last year, compared to the extremely high-profile Fisher Funds Premium NZ Fund, which at number 10 on the list, achieved a mere 30.52 per cent over the period.

Of course, all this pleasing uplift was, as Singh reminds us, from the "low base" that greeted equity investors at the beginning of 2009.

But it would be even more interesting to see how many investors actually participated in the 2009 fund 'rebound'. I suspect quite a few would've bailed out at precisely the wrong time.

FundSource provided some indication of the investor bail-out figures in its September 09 fund flow figures, which showed, with the exception of KiwiSaver, investors were fleeing managed funds.

True, non-KiwiSaver unit trusts grew by a small $7 million in the September quarter, but it doesn't appear that many retail investors 'bought at the bottom'.

It's unclear, too, how much KiwiSaver money flowed into the high-performing Australasian shares sector over the year given a large chunk was invested in conservative strategies.

I can guarantee, however, that PIE Funds didn't receive a single cent of KiwiSaver cash. And almost as certainly, investors will pile into Pie after reading that 104 per cent result in the, statistically improbable, hope that it will double their money again this year.

David Chaplin