Value beats growth for fund managers

Friday 30th January 2004

The Mercer Super Investment Trust and Arcus achieved the highest New Zealand wholesale superannuation fund managers' returns for the December 2003 quarter of 5.4% and 5.3% respectively before tax and fees.

Both had higher than average exposures to overseas shares during the quarter. Arcus also had a higher than average allocation to domestic equities. The median return for the quarter was 4.6%.

However, Tower Asset Management topped the survey of three years of results.

Tower had ranked ninth of the managers in the December 2000 survey but returned 4.8% per annum over the past three years to take top place.

Arcus and BT Funds Management were the joint highest performing managers in 2000. In the December 2003 survey Arcus placed second and BT seventh over the three-year period.

Arcus returned 4.4% a year over three years. Managers with three-year performance at or above median in both surveys were Arcus, Guardian Trust Funds Management and Colonial First State.

"Value" as an investment style performed better than 'growth' over the three month period, with the MSCI Value Index (unhedged New Zealand dollar) producing a return of 4.9% against a return of 1.9% for the MSCI Growth Index (unhedged New Zealand dollar).

Returns for the past 12 months have ranged between a gross return of 20.9% from Arcus Investment Management to a 10.0% return from BNZ Investment Management. The median return for the 12 months was 15.0% before tax and fees.

In terms of the asset allocation of discretionary balanced funds, the average exposure to growth assets as at 31 December 2003 was 61.2%.

The lowest exposure to overseas equities was 29.3% (BNZ Asset Management) with all other managers holding at least 32% and the three highest at or above 40%. The highest exposure to domestic (or Trans Tasman) equities was 24.4% from ING New Zealand.

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