New data from Australian research firm, Strategic Insight (SI), reveals the true horror of the December quarter for retail funds with total assets under management slipping by $3.3 billion.
According to the SI figures, NZ retail funds under management (FUM) sank to under $97.3 billion by the end of 2018, dipping below the $100 billion watermark it breached for the first time during the September quarter.
Similar to the SI KiwiSaver data released last month, the full NZ retail fund statistics show the December washout took almost all providers under: only BNZ kept above water over the period, buoyed by strong inflows.
The National Australia Bank-owned BNZ reported FUM growth of 1.1 per cent during the three months to December 31 last year, almost 2 per cent above the next-best thing, BT/Westpac.
BT/Westpac, with a FUM-fall of -0.8 per cent, weathered the quarter slightly better than ASB, which ended the period down 1.1 per cent compared to September 30, the SI figures show.
Of the other top 10 providers in the SI list, quarterly FUM drops ranged from -3.5 per cent (ANZ and Mercer) to -6.7 per cent (AMP).
Adam Boyd, ASB executive general manager wealth, said the December quarter downturn hit most investors with the bank seeing a “modest” decline in FUM “even though actual investment inflows remained strong”.
“This is normal to experience from time to time, but is never comfortable for investors. It has been pleasing to see the majority of investors stick with their plans,” Boyd said. “The recovery in sharemarkets over the first quarter of this year has helped investor balances recover, and this will show up in the FUM figures within the next survey.”
BNZ was also the fastest-growing retail manager over the 2018 calendar year with FUM up 27.5 per cent to end the period with almost $2 billion under management. In the wake of such rapid growth, it is understood the NAB-owned entity is restructuring its funds business with a move to direct mandates. Currently, BNZ invests in pooled vehicles offered by a range of underlying managers selected by Australian consultancy firm, JANA (which is part-owned by NAB).
Aside from BNZ both Milford (up 18.8 per cent) and ASB (11.8 per cent) experienced double-digit FUM growth last year, closely followed by Booster (9.3 per cent). AMP (the NZ financial services arm) was the only firm to shed FUM over the annual period, ending 2018 with just over $11 billion – 4.6 per cent less than the almost $11.6 billion it held 12 months prior.
Mercer (up 0.1 per cent) and ANZ (2.8 per cent) were the only other managers named in the SI report with annual growth below the industry average of 5.4 per cent. However, the almost $27 billion ANZ remains by far the biggest retail manager in NZ followed by ASB (about $14.5 billion).
“Over the whole of the past year [NZ retail fund FUM] rose 5.4% which was significantly lower than the 16% average growth experienced over the previous five years,” the SI report says. “As we go to press markets have subsequently recovered much of their December quarter falls, however [they] remain highly volatile and unpredictable.”
However, gross fund inflows of almost $28 billion last year represented an annual increase of 17 per cent, roughly in line with the five-year average yearly growth-rate of 19 per cent, SI says.
“There was the usual pause in reported Inflow growth during the December quarter which saw them decline by a marginal 0.8% due to KiwiSaver seasonality factors,” the SI report says. “Year on year Generate, Milford, BNZ, ASB and ANZ all posted above average Inflow growth rates while on the other hand those reported by AMP were lower.”