AMP Capital increases bets on global growth

The company has increased its bets on global growth, favouring share valuations even after bonds outperformed equities in the second quarter.

BUSINESSDESK: AMP Capital Investors (NZ), which manages $12 billion worth of assets, has increased its bets on global growth, favouring share valuations even after bonds outperformed equities in the second quarter.

AMP Capital's holdings of New Zealand fixed interest returned 3.9% in latest three months, second to property on 4.7%, while global fixed interest returned 1.8%.

By contrast, all of its share funds provided negative returns in the second quarter. That won’t last, the fund manager said today.

“While bonds made a comeback over the June quarter, most growth assets are still ahead of bonds for the year to date,” said Keith Poore, head of investment strategy. "Further policy support plus a pick-up in global growth over the course of the year should see this trend continue.”

Europe was the main cause of the bond rally and sharemarket decline in the second quarter, following fears of a Greek exit from the euro and concerns over the Spanish banking sector.

The European Union Summit in June helped appease investor concerns after policymakers agreed on a joint banking agreement for the region.

"If we are not having a full fiscal union let's move towards a banking union," said Bevan Graham, AMP Capital’s chief economist. "Markets are getting used to that element of not knowing – it's learning to like a bit of political insecurity.

"This is not an economic crisis, this is a political crisis and politicians will determine the outcome not economists," he said.