Good year for equity funds

Equity funds ended 2009 with strong results for the 12 months, having started the year from a low base, investment researcher FundSource says.

For the calendar year the average return from NZ equity (active) funds was put at 30 percent, while for NZ equity (Australasian) funds it was 39 percent.

FundSource business manager TJ Singh said the Australian and New Zealand markets continued to reflect the improved tone of domestic and international economic data by boosting investor confidence and encouraging investors to return to the market.

"The equity sector started 2009 at a low base, in the midst of the global financial crisis, which serves to make the percentage uplift appear quite extreme by year end," he said.

"Generally speaking, funds which follow a high risk - high return strategy and have an exposure to small cap companies have gained the most during this volatile period."

Mr Singh said funds with Australian exposure had done particularly well, as economic conditions in Australia were stronger than expected, and China's economic relationship with Australia continued to spur the Australian economy.

For just the month of December, the top performing sector was NZ equity (active) with an average 4.1 percent return, while NZ equity (passive) returned an average 3.1 percent for the month.

- NZPA