Small rays of hope in figures

The managed fund sector has broken a record it would rather have seen stay in place.

The sector has recorded its worst ever funds outflow, beating the one set three months ago by $43.8 million.

According to managed fund research house FundSource the net funds outflow in the three months to September was -$127.2 million compared to -$83.5 million in the three months to June 30.

"The outflow was primarily attributable to the $252.91m net outflow recorded in the diversified fund sector. The deterioration was also exacerbated by net outflows in the international fixed interest fund sector and more surprisingly in the NZ equity fund sector."

On the positive side of the ledger were mortgage and cash funds, which recorded gains of $99.19, and $121.71m respectively.

However, the mortgage fund sector net inflows were again isolated to three bank funds, namely those of the BNZ, ASB, and Westpac.

Net funds under management (NFUM) fell from $18.2 billion to $17.4 billion over the quarter, representing a 4.1% decline and $748.3m fall.

The magnitude of the fall was in line with the previous quarter's 4.1% fall but marginally better than the decline of 4.3% recorded in the September 2001 Quarter.

FundSource says the quarter’s decline was principally the result of weakness in international equity markets.

While the funds flow has been bad FundSource reckons several factors suggest a turnaround in investor sentiment. Not least of all has been the positive inflow to international equity funds, albeit marginal ($2.08m), and the modest net outflows from international and NZ fixed interest and also net outflows from NZ equity.

"This may suggest investors re-weighting their portfolios toward what is expected to be growth in international equities," the company says.

Kiwi Income Property recorded the highest net funds flow of $69 million, due to its 6 for 1 rights issue in July.

National Bank was in second place attracting $61.8 million, solely attributable to an $80 million inflow into its cash fund.

Third place was Macquarie, which also benefited solely from a cash sector inflow.

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