Domestic bonds tops in Oz: Morningstar

Most asset classes in Australia took a hiding last year, according to Morningstar, however some funds which are used by New Zealand investors performed well.

Wednesday, January 21st 2009, 6:54AM

Morningstar describes 2008 as the year most investors would prefer to forget. Multi-sector funds, the mainstay of many super funds took a hammering, and the Australian share market recorded its worst return in years, shedding 38.92% for the calendar year.

Active managers tended to outperform the index and most value managers were slightly more successful than growth managers. Outperform though, still meant funds posted big negative returns.

However there is some good news. Several funds which are promoted and used by New Zealand advisers have performed well, particularly with international shares. Boutique newcomer Magellan “had a stellar maiden year” managing to contain its losses to 2.65%, putting it at the top of Morningstar’s international equities league table.

The research house says that although it has a concentrated portfolio, there have been some good stock picks and it also had a large cash position. Another fund to get mention was Kerr Neilson’s Platinum International Fund which only fell 7.39% for the year.

“This adds further lustre to Platinum’s outstanding longer-term track record.” The news wasn’t so good for the listed property trust sector, an area New Zealand investors have some exposure to.

According to Morningstar the sector went “from bad to worse” as the year progressed ending down 55.31%.

It was the worst performing asset class in Australia in 2008. Morningstar says the sector was weighed down by the Centro Properties Group debacle.

The best performing asset class was domestic bonds. The last time this sector took the number one spot was in 1992. Last year it produced a return of 14.95%, which even eclipsed hedged international bond funds.

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