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Platform data shows NZ investors tilt to property

Date: 29th November 2019

Platform data shows NZ investors tilt to property, passive in 2019

Investors surged into listed property funds during 2019, according a new analysis of flow data by Wellington-based platform, InvestNow.

According to the just-released figures, the proportion of InvestNow members holding property funds almost doubled over the six months to September 30, jumping from 17 per cent to 33 per cent.

The direct-to-investor fund platform boasts more than 16,000 members and almost $400 million in assets under management.

Mike Heath, InvestNow general manager, said the swing to real estate funds was understandable in light of the general yield-seeking trend.

“In one sense the growing appetite for listed property funds is not so surprising as they tend to offer higher income that investors value more in this low interest-rate environment,” Heath says. “Even so, we were surprised to see the real estate fund investor numbers double over such a short time period.”

The InvestNow data also shows a 33 per cent increase in members’ overall allocation to fixed income funds during the six-month period – albeit from a low base.

About 12 per cent of investors on the platform had fixed income (bond) fund holdings as at September 30 compared to 9 per cent six months previously.

Intriguingly, the InvestNow flow figures show while the percentage of members allocating to multi-asset income funds (that can hold equities, bonds and cash etc) rose only marginally over the period, those investors significantly increased their exposure.

“Over the six months to September 30 we saw average funds under management [FUM] for customers invested in these income products rise by almost 30 per cent,” Heath says. “Clearly, investors already holding income funds have been pleased with how the products performed.”

“The other trend we are following very closely is with regards to the bank term deposits we offer,” Heath says. “There is a clear preference for the six month term, but is this rate lead or simply that most customers are happy for their cash to be locked up for no more than six months? Plus it will be interesting to see where term deposits sit alongside income funds for our customers looking for income from their portfolio.”

The InvestNow analysis also found a marked increase in index investing over the six-month period with the proportion of passive-only clients rising from 35 per cent at the end of March to 43 per cent in September: conversely, the percentage of active-only investors fell from 32 per cent to 22 per cent while the number of those who use both strategies increased slightly.

Furthermore, platform data for the 2019 calendar year until the end of October shows the share of passive fund trades on InvestNow jumped from 58 per cent to almost 70 per cent over the period.

“InvestNow has a healthy mix of both active and passive funds,” Heath says. “While index investing has always been popular among our customers, the upward trend over the year is an interesting development.”

Just two index products feature among the top 10 performing funds on InvestNow for the 12 months ending October 31 – both from the NZX-owned Smartshares range.

“And seven of those best-performing funds over the year were in the listed property sector,” Heath says.

ends

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