KEY POINTS:
Investors in AMP Capital Investors' balanced fund saw their investments go backwards by 4 per cent in the March quarter, but the good news was that "return" was the best performance from the major fund managers.
AMP Capital's growth fund had a negative 6.7 per cent return and
even the conservative fund had a negative return - albeit 0.1 per cent.
Over the same period, the NZX-50 share index had a negative 13.6 per cent return.
AMP's balanced fund in the year to March earned a 4.7 per cent return.
Head of investment strategy, Leo Krippner, admitted the fallout from the global credit crunch was worse than anticipated.
However, he was at pains to stress the funds are long-term investment vehicles.
Over the past three years, the balanced fund's annual, pre-tax return has been 10.3 per cent and over the past five years, 11.9 per cent.
"There's no doubt about it, it's been tough times for markets," he said of the recently completed quarter.
"Risk has been realised rather than rewards."
Krippner rated the chances of the first quarter results being repeated in the rest of the year as "quite slim" although he said the full year was likely to be "pretty mediocre".
Investors in the new KiwiSaver scheme had had a rough introduction but Krippner said the market dive would have focused investors' minds on the type of risk they were prepared to live with.
NZ shares were the worst performing sector in the quarter at negative 12.7 per cent. Global shares were at negative 11.2 per cent and even global bond markets had zero returns.
NZ property was the stand-out performing asset class, up 10.4 per cent.
While New Zealand shares had fallen to a level where they were now good value, there was an increased risk profits would be revised down in response to the slowing economy.
The NZ dollar is still estimated by AMP to be 10 per cent overvalued, and as the Reserve Bank begins an easing cycle in the second half of this year, international investors would focus on the current account deficit and dump the kiwi dollar.
AMP believes it is prudent to be cautious and has underweighted its portfolio in global shares and, to a lesser degree, NZ shares, global bonds and international property. It is overweight in New Zealand property and foreign currency.
- NZPA