NZ fund manager positions on just two stocks have skewed their results either way during the June quarter, according to the latest Melville Jessup Weaver (MJW) Investment Survey.
The NZ share market returned 5.9 per cent over the three months ending June 30 – the best-performing asset class recorded by MJW for the period – with much of the increase attributed to just two companies: a2 Milk and Xero, up almost 40 per cent and 30 per cent, respectively, during the quarter.
“The concentration in performance means that we see a wide divergence from NZ share managers depending on their views of these two names,” the MJW survey says. “The top-performing manager (Milford) returned 17.4% for the year, outperforming the worst performing manager (Devon) by 11.4%.”
Over the June quarter returns for the 18 NZ equities wholesale funds tracked by MJW ranged from 8 per cent for Milford to 3.7 per cent for the Salt Focus Share product. Milford (22.3 per cent) also tops the five-year return table with worst-performing NZ shares fund, the Craigs Investment Partners in-house manager, Quay Street, returning 18.6 per cent over the period.
Just 11 of the current batch of NZ share funds have a 10-year track record with returns ranging from 12.7 per cent for Mint Asset Management to 7.1 per cent for the Nikko SRI fund.
Ben Trollip, MJW principal, said KiwiSaver funds, especially in the growth category, also recorded diverse results for the quarter and annual periods.
Kiwi Wealth, the best-performing KiwiSaver growth fund in the 12 months to June, returned 15.3 per cent compared to 10.1 per cent for the Booster.
The government-owned Kiwi Wealth growth fund is something of an outlier in asset allocation, investing over 80 per cent in global shares. By contrast, the next-highest international equities exposure, AMP’s Aggressive KiwiSaver option, has 56.4 per cent in the asset class.
“Kiwi Wealth has almost zero domestic equities and also has no bonds – both probably drivers of the good returns [for the year],” Trollip said.
The MJW data shows for the 12 months ending June 30 the global equities benchmark returned 15 per cent on an unhedged basis (or almost 21 per cent for the hedged version) compared to 11.7 per cent for the NZX 50 index.
Swinging asset class performances also show up in the KiwiSaver growth category with two of the annual period bottom-dwellers – Westpac and Milford (both returning 10.5 per cent for the year) – reversing roles in the quarterly results, claiming first and third spots, respectively, with returns of 3 per cent and 2.7 per cent.
“Westpac has a relatively low weighting to global bonds and large exposures to property and alternative assets,” the MJW survey says. “With many equity and credit markets looking to be at stretched valuations, an allocation to alternatives would seem to make sense.”