Unhedged global equities reprised its previous role as asset class of the quarter in the latest Melville Jessup Weaver (MJW) investment survey.
The unhedged MSCI World index was up 7.2 per cent over the September quarter, the MJW report shows, compared to 5.5 per cent for the hedged version of the same benchmark.
NZ equities also notched up another sterling quarter with a 4.9 per cent return for the S&P/NZX 50, bringing the 12-month performance for the local bourse to 19.1 per cent – just a tad behind the 21.3 per cent result for unhedged global shares over the same period.
“It would have been a brave bet to state the headline [NZ equity] index would rise more than 70% from three years ago and anyone who did so deserves a pat on the back,” the MJW report says.
However, just a handful of NZ share funds beat the benchmark over the quarter – notably the Castle Point Trans-Tasman Strategy (due to launch as a portfolio investment entity soon), the Devon NZ Core fund and Quaystreet Asset Management – with the median manager about on a par with the index over the 12-month stretch.
Ben Trollip, MJW partner, said the September quarter results closely matched the June experience as dampened volatility and upbeat equity markets (in the US and NZ, at least) keeping investors happy.
“But markets have turned around a lot since the end of the quarter so there will likely have been some significant short-term falls,” Trollip said.
Even prior to the early October volatility, the MJW report warns “caution and scepticism are warranted” in spite of the positive September quarter.
“While equity markets in US and New Zealand have accelerated, this hides some weaker results from other areas of the portfolio,” the survey says. For example, UK, European and emerging market equities all lagged during the quarter as global bonds stagnated.
The report says investors were also keeping a close eye on the flattening US yield curve – close to levels seen prior to previous recessions.
“However, it is important to note that the spread can remain tight for an extended period (as it did through the mid and late 90s),” the MJW report says. “Indeed, the spread was as tight as we currently see as early as June 2005, well before the onset of the GFC.”
All KiwiSaver funds in the MJW survey turned in positive results during the September quarter with mostly narrow spreads between the top and bottom manager in each risk category. Kiwi Wealth topped the conservative, balanced and growth KiwiSaver risk profiles for the quarter; AMP was ahead in the balanced and balanced growth categories; while Booster outperformed Mercer in the two-horse ‘high growth’ race over the three months to September 30.