Last quarter unexciting

Despite an improvement in the performance of international sharemarkets, over the June 2001 quarter, investors are continuing to channel money into more conservative funds, such as mortgage and fixed interest.

The latest retail funds management industry trends, as measured by the June quarter FundSource Market Trends and Composition Report, shows this quarter’s NZ overall industry net funds inflow (NFF) was $354m, up 62% on the $211m inflow in the March 2001 quarter. Total Net Funds Under Management (NFUM) increased by only 3% in the June quarter to $18,629M and by 6% over the year to 30 June 2001.

Fund flows into the NZ diversified sector repeated its declining trend this June quarter, losing $4.6M, though this was a slightly better outcome from the $16.3 outflow last quarter. The NZ equity sector suffered, once again, a similar fate with a net outflow of $0.93M from the sector.

Positive net funds inflow of $353.7 million compared to $210.8 million for the March 2001 quarter.

Net funds under management grew to $18,629 million at the end of June compared to $18,110 million at March quarter end.

ASB Bank moved into first place for net funds flow this quarter, with $86.10M. The majority, 69%, of this inflow was into its Residential Mortgage fund. However, the big surprise was the movement of ANZ into second place, up from 23rd, with net inflows of $77.8M.

ANZ had experienced net outflows since September 1998, but this quarter they managed to draw over $54M into their mortgage trust and nearly $10M into their cash fund.

WestpacTrust moved to third place and, like with the ASB and now ANZ, their bank distribution network managing to attract the majority of their inflows into their mortgage fund.

AMP Henderson and NZ Funds Management, the only non-banks in the top NFF ranks, continue to attract significant inflows across a broad range of their funds.

Royal & SunAlliance, yet again, have experienced another quarter of negative funds flow, making this the ninth consecutive quarter of net outflows. In the March quarter AXA’s funds flow moved into the black, however this was short lived as now they are placed at the bottom of the NFF table with a net outflow of $10.41M.

Over the quarter the top 5 managers, represented nearly 93% in terms of NFF, the same as the March quarter. Apart from ANZ, the other four were in the top 5 for the March quarter and also the past year, during which the top 5 managers gathered 120% of the total industry’s net inflows. Of the 35 fund managers surveyed, 17 recorded negative NFF.

The mortgage sector continues to claim the largest portion of total net inflows into the industry, however inflows are primarily from mortgage funds offered by ASB, WestpacTrust and ANZ.

Last quarter unit trusts’ total NFUM exceeded, for the first time, that of superannuation funds and with superannuation funds now experiencing net fund outflows this gap is widening.

FundSource believes unit trusts will continue to be favoured over superannuation funds because they offer greater diversity of investment choice and greater flexibility and transparency for investors.

Of the top 10 fund managers, by NFUM, historically most have a large percentage of their assets under management invested in New Zealand diversified funds. However, this is a weakening trend as more net funds under management move into sector funds such as international equities or mortgages.

This was a relatively unexciting quarter for any movement in the NFUM rank table. Nearly all managers stayed in their same ranking position as last quarter, with the exception of some minor switches, for example, Fisher Funds Management moved into 24th place ahead of Jacques Martin.

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