International Equities Begin 2006 on Top
20 February 2006
International Equities Begin 2006 on Top
The month of January saw investors in International Equity funds outperform those in Diversified funds and New Zealand Equity funds. All three categories of International Equities - Australian, Regional and Global - posted strong performances for the month, averaging 3.65%, 5.25% and 3.63% respectively. According to the latest managed funds performance figures from FundSource, this pushed the average returns over the last 12 months up to 19.43% for Global International Equities.
Global International Equities maintain their impressive long term performances as well delivering, on average, a return of 12.3% per annum net of taxes and fees for the last three years.
The investors who maintained a long-term focus and held onto their investments even after the very negative bear market are now being appropriately rewarded with strong doubledigit returns. Unfortunately, funds flow data shows that there are many investors who have done the opposite, withdrawing from International Equities then missing out on the upturn that would have allowed them to recoup their losses.
Diversified funds, although not as strong as in December, have continued to perform well in January with Diversified Balanced funds returning 0.85% for the month and 9.64% for the year. Growth funds, with their more aggressive allocation to international shares, produced a 1.1% return in January and 12.0% over the last 12 months, while the more conservative
Diversified Defensive category delivered 0.36% and 6.28% for the month and year respectively. Cash and Mortgage sectors have continued December’s trend delivering small positive returns through January. This nudged along their annualised averages for the last 12 months to 4.04% and 4.94% respectively. FundSource’s managed fund returns are provided net of all relevant fees and taxes, reflecting the returns received by an investor in the fund. Website: www.fundsource.co.nz
Following is a summary of the main investment sector performances: New Zealand Equity (Active) Unit Trusts Actively managed NZ Equity funds, with an average decline of 0.57%, felt the effects of a subdued month for the New Zealand stock exchange. This is contrary to their annualised averages of 5.17% for one year and 10.63% for two years.
In line with expectations, the trend is likely to continue as economic conditions and the business environment become more challenging in the future. The top performing fund for the month of January was AMP Strategic NZ Shares Trust at 1.73% and the ING Equity Selection Fund outperformed the rest over the last 12 months, averaging 10.44%, well above the 5.17% sector average.
International Equity (Global) Unit Trusts Long term performance for this sector is impressive with Global International Equities delivering on average, 12.27% per annum net of taxes and fees, for the last three years.
This is great news for those who have maintained their investments in International Equities. For recent entries the average results for the last 12 months are also great with an average of 21.54% and all funds returning over 10% for the year. With the NZ dollar staying relatively stable throughout the month, neither hedged or unhedged funds were advantaged this month.
Diversified Funds Diversified funds, although not performing strongly, were all above the index for January. Diversified Defensive funds, with their focus on yield rather than growth, produced the lowest average performance at 0.36% in January and averaged 6.25% net of taxes and fees over the last 12 months. Diversified Growth funds produced 1.14% in January and 12.03% over the last 12 months, showing that they too are affected by the current trends in the NZ stock market, despite their slightly more aggressive portfolio.
The top performing fund for January amongst the Diversified Balanced funds was the AXA Balanced Growth Trust at 1.72% and for the last 12 months the AMP Dynamic Trust averaged 17.73% in the Diversified Growth sector.