Kiwi investors loaded up on risk assets during the 12 months to March 31 to record levels while the ‘private wealth’ sector, in particular, saw a spectacular boom, according to the latest Reserve Bank of NZ (RBNZ) statistics.
The RBNZ quarterly survey of managed funds held on behalf of non-government investors found listed share holdings across the industry rose almost 6 per cent during the three months to March 31 to a “record high” of $110.6 billion – almost half the total $237 billion under management at that date.
“Over the quarter most flows and rebalancing’s have been into shares, with the other major asset classes holding largely flat for the third quarter in a row,” the RBNZ report says.
Equity exposure is now almost double the $62 billion plus invested in long-term bonds, the survey says: at the end of March 2020, NZ investors had about $70 billion in shares compared to $60 billion in bonds.
Allocations to cash tipped up slightly to $33.8 billion in the March quarter as did ‘units in trusts’ ($50.6 billion) while short-term debt dipped a little to $16.7 billion.
“Despite rising in March 2020 due to Covid uncertainty, cash has not been a place fund managers have looked to hold a large amount of capital floating around 6% of total funds under management since March 2020,” the RBNZ report says.
KiwiSaver rebounded about 30 per cent from the March 2020 low to reach over $82 billion 12 months later while the traditional superannuation market also climbed almost 20 per cent from the COVID low-point to hit $33.4 billion during the same period.
However, the ‘private wealth’ sector – that covers a range of individually managed portfolios – recorded by far the largest proportional gain (of 27 per cent) since the end of 2019 compared to the unit trust market.
Since December 31, 2019, private wealth funds under management jumped almost 30 per cent against just 1 per cent for retail unit trusts and declines of -2 per cent and -8 per cent for cash management trusts and wholesale trusts, respectively.
“Private Wealth increased for the fourth quarter in a row, up 2.4% to $36.6b,” the RBNZ survey says. “Private Wealth initially fell 12% in the first quarter after the onset of the COVID-19 pandemic, but since then has increased 44% from the March 2020 lows.”
Meanwhile, the KiwiSaver exposure to offshore assets surpassed domestic holdings again in the 2021 March quarter.
KiwiSaver has generally been weighted to local holdings since the first reporting period to the end of March 2008, except for the six-month period starting at September 30, 2013, and for one quarter in 2019.
Global assets represented almost $42 billion of KiwiSaver funds as at the end of this March compared to just over $41 billion in local exposures.
KiwiSaver funds held about $29 billion in offshore equities at March 31 versus $23.5 billion in NZ shares: 12 months previously the two asset classes were neck-and-neck.
The RBNZ quarterly survey takes in 32 funds and managed portfolios with more than $1 billion under management, equating to roughly 93 per cent of the total market (excluding the NZ Superannuation Fund and Accident Compensation Corporation fund)
RBNZ also does an end of financial year wash-up study that “attempts to cover the remaining 7%, surveying 32 small funds”.