Bonds, New Zealand equities keep diversified funds steady

Bonds, New Zealand equities keep diversified funds steady

The September quarter was buffeted by global economic winds but New Zealand’s position remains relatively robust said Bevan Graham, Chief Economist for AMP Capital New Zealand.

AMP Capital's diversified funds reflected the turbulence in offshore markets: its Conservative Fund returned -0.7 for the quarter and 4.1% for the year, its Balanced Fund was down by 5.3% for the quarter but returned 1.1% for the year and the Growth Fund was down by 10.2% for the quarter and down 2.4% for the year to September 30. The Fund Manager’s responsible investment balanced fund returned -4.5% for the quarter and was up 2.8% for the year.

AMP Capital’s Unhedged Global Equities Fund returned -10.1% for the quarter and -8.6% for the year while the Hedged Global Equities Fund returned -16.7% and -2.4% respectively. New Zealand Equities average return was down 3.1% for the quarter but up 4.4% for the year, reflecting New Zealand’s relatively stronger economic position.

The New Zealand Fixed Interest Fund returned 3.5% for the quarter and 8.4% for the year and AMP Capital’s Global Fixed Interest Fund was up 4.6% during the quarter and 6.9% for the year..

Mr Graham said the mismanagement of public debt problems in Europe and the US was having a significant impact on consumer and business confidence, and sharply lower global markets have made their mark on domestic fund performances.

"Although global data is soft and risks remain high, it’s important not to panic. It’s really a case of ‘keep calm and carry on’. Money and credit markets are in better shape than during the GFC, and the 'emerging world' is in relatively good shape. There are still positive signs out there. Lower food and energy prices will help any recovery. The Japan supply chain disruptions are ending and the collapse in borrowing costs and return on cash in the US is an inducement to refinance and invest.

“In New Zealand, yes we're vulnerable but we're also in comparatively good shape. Terms of trade are at multi-decade highs, key export markets are relatively firm and monetary conditions are highly stimulatory. The housing market is recovering and household savings are rising too. Not least, the New Zealand dollar is down from its highs,” said Mr Graham.

“In our view the global recovery is still on track but remains fragile.”

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