Tuesday 1st February 2005
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Investors continue to pull money out of managed funds are record levels despite a period of strong returns.
The latest fund flow figures from Fundsource, for the period to December 31, money is coming out of the industry across the board and no manager is immune to this leakage.
What’s more the reasons for this fund leakage aren’t readily apparent.
“I have given up at this point attempting to predict when the turn around may come for funds flow into managed funds” Fundsource business manager Tim Anderson says.
Ever the optimist he does say that with “continuing good fund performance it is only a matter of time”.
The puzzle is neatly summed up by these two statistics.
During the quarter investors withdrew $630 million from funds, yet, because of good performance the managed fund industry in aggregate grew net funds under management by 1.5% to $19.9 billion.
“Net outflows in the face of good performance come as a surprise to us as this pattern goes against our past experiences of investors’ behaviour. With improving forecasts in international equities, and strong momentum in New Zealand equities it also raises the question of whether these investors are making rational choices guided by a sound investment strategy, or instead relying on less rational decision criteria,” Anderson says.
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