Tough quarter for investors, fund managers

Recent market volatility is an opportune time for investors to re-examine their portfolios, especially with respect to their risk appetite, actuarial firm MJW says.

Tuesday, January 22nd 2019, 6:00AM

It has released its latest investment survey, in which it says 2018 ended on a sour note for investors.

For the quarter, the S&P/NZX50 was down 5.6%, including imputation credits, the ASX200 down 8.2%, the MSCI world index down 13.1% in local currency and emerging markets down 8.5%.

MJW said the Federal Reserve had ignited the risk-off sentiment with a statement indicating it had some way to go to normalise interest rates. The tone was perceived as more hawkish than expected.

Shares were punished, with the US S&P500 falling almost 10% from peak to trough.

The New Zealand share market was down 5.6% and the median manager underperformed the index.

The best-performing core fund was AMPCI’s Responsible Investment Fund which fell only 4.5% in the quarter.

Among non-core funds, Harbour's Equity Income Fund fell only 2.6%.

For New Zealand share funds, the median manager lost 6.4% in the quarter. The worst performer was Harbour, down 9.9%.

Australian share funds lost a median 12.8%, with ANZ down 19.3% and global share funds lost a median 13.5%, with Nikko's multi-manager fund down 15.4%.

Bond funds had a comparatively good quarter, up a median 1% for global funds and 1.4% for New Zealand funds.

“This is because interest rates fell, leading to mark-to-market gains on fixed interest securities. Longer duration funds have more sensitivity to interest rates, and this is perhaps why the top performing New Zealand bond fund for the quarter was Fisher’s. Fisher has 5.2 years’ duration versus a much shorter duration peer group,” MJW said.

“It was a challenging quarter for investors. Many saw the investment gains made in the second and third quarters of the year more or less wiped out.”

Tags: Markets MJW