Managed funds take turn for the better

By MARK FRYER

Suddenly, something novel has emerged from the managed funds business - some good news.

Figures from research company FundSource show that in the latest three months (to the end of May) every category of fund produced a positive return for investors.

Actively managed New Zealand sharemarket unit trusts and group investment funds, for example, were up 7 per cent after tax and fees over the three months. International sharemarket funds made 9 per cent and diversified balanced superannuation funds gained 5 per cent.

Those are averages; within each category some funds will have done worse, some better.

However, even looking at the individual funds, of the total of 595 analysed by FundSource, the number which lost money in the past three months can be measured on the fingers of two hands.

In general, funds which focussed on the sharemarket - either here or overseas - did best, with many rising 10 per cent or more in the space of three months.

This outbreak of glad tidings is a change from with the recent past, which has seen many managed funds delivering a steady diet of bad news for their investors.

But while the three-month numbers will be welcome, most managed funds are medium to long-term investments and over the medium to long term a lot of the news is still grim. As an example, an investor who put $1000 into the average balanced superannuation fund 3 years ago now has about $931.

The worst news has come from funds specialising in international shares. An investment of $1000 in the average global sharemarket unit trust or group investment fund three years ago would now be worth just $659.



The numbers also show that New Zealand has not been a bad place to hide over the past three years. Over that time, while international sharemarket funds were going backwards fast, $1000 invested in the average actively managed local sharemarket unit trust or group investment fund would have grown to $1150.

The best-performing category of all over the past three years has been New Zealand property unit trusts and group investment funds. On average, they would have turned $1000 into $1290.