Balanced managed funds continued their recovery, delivering a positive return for the third consecutive quarter and regaining much of the losses experienced in 2008, a survey shows.Mercer's survey of New Zealand wholesale balanced funds for the December q
Balanced managed funds continued their recovery, delivering a positive return for the third consecutive quarter and regaining much of the losses experienced in 2008, a survey shows.
Mercer's survey of New Zealand wholesale balanced funds for the December quarter shows the median manager returned 14.7 percent for the year ended December 31, compared to minus 14.4 percent in 2008. The median two-year return was minus -0.5 percent.
While funds recorded positive returns in the final quarter, the median return of 2.8 percent fell short of the 7.6 percent median return recorded in the September quarter.
Martin Lewington, Mercer's business leader in New Zealand, said the outlook remained cautiously optimistic for investors.
"2009 was a strong year for balanced funds, many of whom were able to recoup almost all of the losses experienced in 2008 by the end of this past year. However, funds haven't quite broken even yet, which is reflected in the slightly negative two year return," he said.
"Furthermore while the last quarter's returns were still in positive territory the results weren't as strong as we'd seen in the two quarters preceding, reflecting the market jitters that persist as the global economic recovery unfolds."
Over the longer term returns were positive with the median manager returning 1.2 percent per annum over three years and 6.8 percent per annum over five years.
"The effects of the global financial crisis will be felt for sometime in these longer term returns," Mr Lewington said.
The survey also found that balanced funds' average exposure to growth assets as at December 31 was 61.5 percent, compared with 59.1 percent 12 months ago. With the exception of Tyndall Investment Management and Tower all managers surveyed had increased their allocation to growth assets from a year earlier.
The continuing shift to growth assets may suggest that investment managers in general have an optimistic outlook for 2010, Mercer said.
Generally at year end balanced fund managers were investing more in overseas fixed interest and less in New Zealand fixed interest, more in shares and less in property, and were holding less cash than at the end of 2008.
