Global bear market hits AMP Henderson investments

By KEVIN TAYLOR

Funds managed by AMP Henderson lost hundreds of millions of dollars on global sharemarkets last year, but it will not reveal the exact amount.

New Zealand's largest funds manager made public its annual investment performance figures yesterday.

Actively managed global shares returned minus 29.4 per cent for the year. Passively managed global shares returned minus 36.3 per cent, and those hedged against the New Zealand currency returned minus 18.8 per cent. The poor world sharemarkets were the main contributors to a cut in the company's total funds under management from $11 billion 18 months ago to $10.3 billion now.

AMP Henderson New Zealand managing director Catherine Savage said the $700 million loss was a net figure.

The biggest contributor was the fall in global shares, a figure she could not reveal because of commercial sensitivity.

"But countering that, we had a positive funds inflow and the limited positive return from other asset classes, and what we did for currency hedging. "From that you can take that the downward movement in global equities was obviously more than the $700 million," she said.

Chief investment officer Paul Dyer said bonds and property assets were the star performers for AMP Henderson last year. Annual bond returns were 9.2 per cent for New Zealand and 10.1 per cent internationally. New Zealand property returned 8.8 per cent for the year.

While it was a dismal year for global sharemarkets, the situation stabilised in the December quarter and AMP Henderson's global equities passive hedged fund returned 11.8 per cent.

Despite the turmoil, Dyer said, AMP Henderson expected the markets to return to more normal levels.

He expects annual, pre-tax returns over the next 10 to 20 years from global sharemarkets to be 8 per cent. Hedged against the New Zealand dollar he expects the returns to be 10.3 per cent.

"After three years of bear markets, we believe that world sharemarkets are now fairly priced.

"They should deliver average returns of 8 to 10 per cent per annum."

The New Zealand sharemarket is expected to return 11.4 per cent annually, fixed interest 6.2 per cent, New Zealand property 9.5 per cent and global property securities 10.8 per cent.

Dyer said the lesson for investors from last year was the need for good diversification within and across asset classes.

"At the margin, we expect many investors will be looking to add some alternative assets to their portfolios.

"Property and private capital are good options to investigate."