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September a bumper quarter for diversified funds

AMP Capital Investors Limited For immediate release: 24 October 2006

September a bumper quarter for diversified funds

Investors in diversified funds have been rewarded with another ‘bumper’ quarter, said Leo Krippner, Head of Investment Strategy for AMP Capital Investors. “Over the quarter to 30 September AMP Capital’s lower risk diversified fund returned 2.0%, its medium risk diversified fund returned 2.6%, and its high risk diversified fund returned 3.2%. For the year to September 30 2006, the low, medium and high equity diversified funds returned 10.4%, 14.6% and 18.7% respectively,” said Mr Krippner.

“Property as a sector performed extremely well once again – particularly global property which returned 11.3% for the quarter and a hefty 36.5% for the year to September 30. Domestic property was also strong with a quarterly return of 7.3% and the annual return to September 30 at 20.5%.

“September quarter New Zealand equity returns were reasonably modest at 1.3%, partly as a result of the sluggish economy – although the annual return was still a healthy 16.5%. “Global equities’ quarterly performance was very good, as some of the June quarter’s economic and financial headwinds reversed. Hedged active global equities as a sector produced a quarterly return of 8.7%, while the unhedged return of global equities was -2.6% due to the rebound in the New Zealand currency. Annual returns for hedged global equities were 13.6%, and returns for unhedged global equities were 20.4%. Mr Krippner issued a warning that the buoyant returns should not be taken for granted going forward.

“There are some very good reasons why, domestically and internationally, returns are likely to be more modest going forward. One reason is simply that recent returns in many asset classes have been well above the long-term averages we expect based on historical analysis.

“More immediately, the New Zealand economy is growing slower than the rest of the world, which will dampen the returns for New Zealand equities. In addition, global growth looks to have peaked, interest rate rises are still on the cards in Japan and Europe, and political tensions remain a concern in Asia and the Middle East. These also point to more modest returns in the medium term,” Mr Krippner said.


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