Investors give funds a beating

By ELLEN READ

Money continues to pour out of the country's managed funds.

Investors withdrew $247.8 million in the first three months of this year.

The only comfort for fund managers is that the outflow was almost $100 million less than the previous three-month period, research business FundSource says.

Diversified funds were the hardest hit, dropping almost $242.8 million. Mortgages remained in favour, gaining $130.7 million for the quarter and continuing their trend of positive flows over the last three years, FundSource said.

Mortgage funds are seen as more stable than other categories.

Net funds under management - which depend on net fund flow and fund returns - fell from $17.9 billion to $17.3 billion.

The rate of decline deteriorated from the previous quarter's drop of 1.8 per cent and was split broadly between fund outflows and negative fund returns.

Prolonged worldwide equity weakness would continue to depress fund flows over the next six to 12 months, FundSource predicted.

Industry consolidation lifted ING into the top spot in the funds under management table, but the dollar difference between the top five managers is little changed from the December quarter.