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Bonds and property star in 2002 returns

Bonds and property star in 2002 returns

Bonds and local property assets were the star performers for AMP Henderson Global Investors in 2002.

AMP Henderson chief investment officer Paul Dyer said “the bond results were a highlight in a turbulent year. However, we don’t expect them to remain this strong through 2003. Interest rates are unlikely to fall from current levels the way they did last year.”

Annual bond returns were 9.22% for New Zealand and 10.10% for international.

New Zealand property returned 8.8% for the year. “Property assets remain reasonably priced, with yields attractive when compared with other assets,” Mr Dyer said.

The New Zealand dollar also performed strongly, finishing the year 26.7% up on the US dollar since the end of 2001.

“For most managed funds we hedged the currency, which added value throughout the year. We will continue a modest level of currency hedging, but believe there will be less appreciation of the New Zealand dollar into 2003,” Mr Dyer said.

Global equities stabilised in the December quarter and AMP Henderson’s global equities passive hedged fund returned a very strong 11.8%.

“After three years of bear markets, we believe that world sharemarkets are now fairly priced. They should deliver average returns of 8-10% pa, though there will be much volatility,” Mr Dyer said.

New Zealand shares remain reasonably priced. “We still find considerable value in a number of stocks,” he said.

Balanced fund returns were much improved for the quarter, with low, medium and high risk balanced funds delivering 1.33%, 1.62% and 3.38% respectively.

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“The lesson to take out of 2002 is the need for good diversification, within asset classes and across asset classes. At the margin, we expect many investors will be looking to add some alternative assets to their portfolios. Property and private capital are good options to investigate,” Mr Dyer said.

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