Managed funds outflow continues in March quarter

The outflow from managed funds continued over the past three months, in defiance of expectations.

Thursday, April 21st 2005, 9:06AM

by Rob Hosking

Investors withdrew a total of $229.9 million over the March quarter, 11% more than in the December quarter, says Fundsource.

Only New Zealand property and international fixed interest appear to have bucked that trend.

The withdrawal did not reflect poor performances. Net funds under management only declined slightly, and over the past 12 months have grown 1.4% despite net outflows of $675.2 million over the period.

Unit trusts had the largest negative flow of $130.1 million. Australian unit trusts – which have been the target of a government tax crackdown – had negative flows of $11.4 million – the first negative result since March 2003.

Fundsource research manager Binu Paul says the result is disappointing.

“Typically we would expect flows to have turned positive given the strong performances of most managed funds and indeed markets in general over the last year.”

He puts the outflows down to an unusually sluggish reaction from investors, plus a cashing up by some to invest elsewhere.

ASB Bank was the most successful in attracting new funds, with positive flow of 14.6%. The main driver of this was a new fund.

Worst hit by the outflows was Westpac, at $48.3 million.

“The majority of managers followed the same pattern of funds flows over the last two quarters, with only six managers out of 35 experiencing positive flows after negative flows last quarter or vice versa.

“Many of the larger fund managers experienced negative funds flow over the quarter.”

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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