The NZ managed funds market went backwards during three months ending March 31 in the first negative quarter for two years.
New figures released by the Reserve Bank of NZ (RBNZ) last Friday show total funds under management (FUM) fell from more than $264 billion at the end of 2021 to about $257.3 billion by the latest count.
“This fall in total funds under management is likely due to a combination of factors including rising interest rates, and rising inflation,” the RBNZ report says.
The KiwiSaver and superannuation sectors dropped by 2.5 per cent and 5 per cent respectively, reflecting the higher growth exposure of the latter group.
In spite of the March quarter bump downwards, the most recent total KiwiSaver FUM figure of $92.3 billion remains above the almost $91 billion mark set at the end of last September.
KiwiSaver FUM peaked at more than $94.7 billion at the end of 2021, the RBNZ statistics show.
At the same time, the private wealth sector – including individually managed accounts – “decreased 4.5% this quarter from $41.4b to $39.6b”.
“Private Wealth tends to hold a large proportion of shares, so this decrease is in-line with the 5.9% decrease in listed shares. This is the first decrease reported since the March 2020 quarter,” the RBNZ report says.
However, the retail unit trust market “stayed very flat this quarter” suggesting strong fund inflows offset most market losses: regardless, the sector was still off 0.9 per cent from its December high to close with almost $56 billion under management.
“Retail Unit Trusts have been increasing steadily since December 2020, and this is the first time they have been flat,” the RBNZ says.
By asset type, shares declined almost 6 per cent over the March quarter – again, the first negative result for two years – while holdings of long-term bonds remained steady and short-term debt plummeted 7.6 per cent over the three-month period to $15.8 billion (representing a 5.3 per cent fall year-on-year).
“Cash holdings have increased slightly, up 3.0% from $33.9b to $35b,” the report says.
Despite the downbeat March quarter, for the 12-month period, total FUM across all sectors covered in the RBNZ report rose by about 8.2 per cent year-on-year.
KiwiSaver FUM was up more than 10.8 per cent compared to the same time last year.
Meanwhile, cash deposits in the NZ banking system continued to climb upwards in March to reach more than $425 billion: increasing almost $4 billion in the month and about $23 billion for the 12-month period.
Household cash deposits rose roughly $2.8 billion in March to over $219.3 billion – mostly on the back of a spike in transaction account holdings: both interest-bearing savings accounts and term deposits remained steady over the month and March quarter.
Term deposits have ticked up a little this year amid rising rates to almost $157 billion at the end of March; above the November 2021 low of $154 billion but well off the $189 billion recorded in March 2020.