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Tech stock drop hits Arcus in quarterly funds result

Friday 28th July 2000

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The volatile June quarter produced positive returns for all investment sectors with the exception of hedged overseas shares, Mercer New Zealand reported in its survey of managed funds.

Unhedged overseas investors gained an enhancement in performance from a significant depreciation in the New Zealand dollar against most major currencies.

All but two managers in the survey reported a positive return before tax and expenses. The return of the median manager for the June quarter was 1.8%.

Last quarter's top-performer, Arcus Investment Management, suffered from the impact of the fall in technology-related stock prices, with the lowest return at -1.1% for the quarter.

The highest return for the quarter came from Colonial First State with 3.9%, aided by a strong Australasian equity performance from a portfolio that did not include Telecom.

Returns for the past 12 months have ranged between a gross 20% return for BT Funds Management (BTFM) and a gross 8.2% return for Tower Asset Management (Tam).

The median for the 12 months was 12.2% before tax.

Only four managers had less than 30% invested in overseas equities, while the highest exposure to domestic equities was Royal & SunAlliance's 24.7%.

Three years ago, only two managers had overseas equity allocations over 30% (Tam and BNZ). Today, these two managers have less than 30% allocated to overseas equities, while most other managers have increased their exposures to over 30%.

The exceptions are Colonial, which has increased its exposure from 14% to 26%, and Royal & SunAlliance, from 21% to 27%.

BTFM was the highest-performing manager in 1997 but is fifth today.

In contrast, WestpacTrust was the lowest-performing manager three years ago but is now above median.

The most consistent managers, having above-median three-year results in both surveys, have been Armstrong Jones, BTFM and Guardian Trust Funds Management.

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