Employer-sponsored managed funds grow 15pc

BY ROMY UDANGA

Last updated 14:24 29/07/2010

Relevant offers

Money

Feltex class action swells by 800 Banks take $3b profit overseas National grid upgrades blamed for power price rises SFO looking into gold bullion fraud Hundreds lose money after trader dies Final wash-up leaves creditors nursing losses Online fraudster warning as ripoff cost grows Minimum wage rises - by 50 cents More investors claim tax losses Kiwis happier over their finances

Employer-sponsored managed funds grew by 15 per cent over the 2009-2010 period and now sit close to $3.9 billion, according to a new survey released today.

The Eriksen Master Trust survey for the year ending June 30, 2010 show that funds where there are employee and employer contribution components - excluding KiwiSaver and personal superannuation - earned overall 6.9 per cent after tax and expenses compared to last year's loss of 8.5 per cent.

Eriksen and Associates Principal Jonathan Eriksen said the solid gains in recent months reflect, in part, a recovery from a low base.

"The latest annual returns represent a consolidation and give reasonable real returns over both the net cash rate of 1.9 per cent and inflation," he said.

However, the June 2010 quarter saw some sharp falls in asset values as investors became nervous about a possible slowdown in the global recovery, he said.

"High sovereign debt levels, generally high unemployment in the developed economies, and businesses hoarding cash all point to governments, consumers and business being unwilling to spend for the next little while," Mr Eriksen said.

Aggressive funds performed best in the past year with aggressive funds that invest in a single sector posting returns of 8.2 per cent, while balanced and growth funds returned 7.7 and 7.0 per cent respectively.

Defensive funds showed positive returns, with single sector defensive funds recording returns of 4.3 per cent, down from last year's 5 per cent, while conservative funds earned 5.7 per cent compared to last year's loss of 0.3 per cent.

Over an annualised five-year return, however, defensive funds were still the winners, with a return of 4.8 per cent compared to the 3.7 per cent result for conservative funds. Single sector aggressive funds still posted a 0.9 per cent loss over this period.

In terms of fund size, though single sector aggressive funds recorded the highest percentage growth of 31 per cent to sit at $240.4 million. Balanced funds followed with 17 per cent growth to just under $2b, - the largest increase in dollar terms of $285m.

TABLE1: Master trust performance by fund type.

Fund Name

Fund Size
2010
($ million)

Fund size change ($ million)

Fund size change

Ad Feedback

(%)

Net annual returns
2010

Annualised returns over five years

Growth Funds

630.3

85.5