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Christmas Comes Early For Managed Fund Investors

Christmas Comes Early For Managed Fund Investors

Investors in New Zealand managed funds look set to finish the year 2006 on a ‘high’ with their investments experiencing strong returns across the board for the month of November, as per FundSource’s latest monthly managed fund performance figures.

“A number of factors have contributed to all-round cheer for managed fund investors in 2006. While this has primarily been underpinned by strong global growth, the New Zealand share market too has been especially resilient. In fact returns have been very strong over the last few years and as such, we have seen relatively greater demand from investors for managed fund investments - a reversal in trend from recent years. Upcoming changes to how funds are taxed also make it an even more exciting investment opportunity for investors. Initiatives like the Kiwisaver will only widen the consumer base for funds”, says Binu Paul, General Manager at FundSource a subsidiary of the New Zealand Exchange Limited (NZX).

The International Equity (Regional) sector lead the way in November, bringing in the strongest gains of 2.9% on average for the month. One year returns for this sector are now at an impressive 28.5% after tax and fees. This sector has benefited as Asia-Pacific region (ex-Japan) and emerging market equity investments fared well over the month and the year to November.

The NZ Equity fund sector followed close behind in terms of performance. NZ Equity Active, NZ Equity Passive, and NZ Equity Australasian averaged 2.7%, 2.3% and 2.1% respectively, bringing annual returns for each sector (after tax and fees) to a corresponding 18.8%, 17.4% and 16.7%.

Diversified funds benefited from the strong International Equity (Regional) and New Zealand Equity returns, particularly over the one year period. Diversified Growth, Balanced and Defensive sectors have returned a notable 11.5%, 9.6% and 6.2% respectively over the twelve months to November.

On the income asset front, the NZ Mortgage sector returned 0.41% for November, NZ Fixed Interest returned 0.30% and NZ Cash returned 0.38%. These sectors have returned 5.1%, 3.8% and 4.5% over the one year period to November respectively.

Meanwhile the NZ Property sector gained a positive 0.48% for the month of November, up a significant 12.5% for the year.

The following is a summary of key investment sector performances for this month:

New Zealand Equity (Active) Unit Trusts
The New Zealand Equity (Active) sector was up 2.7% on average over November as the benchmark NZX50 index continued to reach new all time highs. One year returns for this sector now sit at 18.8%. New Zealand Equity (Passive) funds returned 2.3% on average for the month, and a robust 17.4% for the twelve months to November.

International Equity (Global) Unit Trusts
While the International Equity (Global) sector averaged returns of just 0.07% for the month of November, over the one year period this sector has returned a significant 15.7%. Over the last three years to November International Equity (Global) funds have seen returns of 10.6% per annum on average.

Diversified Funds
With the assistance of strong performances from both Regional International equities and New Zealand Equities, all the Diversified sectors experienced healthy gains in November.

- Diversified Growth funds returned 0.45% for the November month; the more aggressive asset allocation of these funds has brought in returns of 11.5% on average over the one year period.
- Diversified Balanced funds also returned 0.45% for November; while bringing in one year returns of 9.6%.
- Diversified Defensive funds, the most conservative of the three diversified sectors, returned 0.41% over the month, with average returns of 6.2% over the twelve month period to November.

All three Diversified sectors continue to provide average annualised performance figures of between 5% and 11% over the past three years, net of tax and fees.


Sector Average 3 year Performance
(net of tax and fees)
NZ Equity (Active) 14.6%
International Equity (Global) 10.6%
Diversified 8.4%
NZ Fixed Interest 3.6%

FundSource provides managed fund returns net of all relevant fees and taxes, reflecting the returns an investor in the fund receives.


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