Big fund manager sees good opportunities in local companies

AMP Capital Investors is creeping back into local shares on the view that the worst of the market carnage is over and there are golden opportunities to invest in good companies at rock-bottom prices.

The firm, New Zealand's largest private sector fund manager, yesterday presented its quarterly investment update.

Although head of investment strategy Jason Wong had told the Business Herald he was wary of reports of "green shoots of growth" in some corners of the world's markets, yesterday he said global economic activity was "no longer in a downward spiral".

"It's very early days in the economic healing process, but for the first time in a long time we are seeing some upward revisions to global growth estimates and risk assets such as equities are responding positively to this change in trend."

Despite their poor performance in the past 12 months, equities were looking more attractive than bonds and cash.

"There are good, solid-looking opportunities to be had in equities in this environment," said Wong, who also pointed out that AMP was now overweight in shares, although its strategy was to gradually add to its holdings.

That said, AMP head of New Zealand equities Guy Elliffe said the firm had been "pretty active" in institutional placements, including Nuplex, Freightways and Fletcher Building.

"It's pretty nice timing from our perspective. From a cyclical point of view it seems like a good time to increase higher beta equity type exposures which a number of those companies fit into.

"We think the pricing's been pretty attractive in a number of the issues. A lot of the placements have been at pretty close to cycle-low prices. We just think we've got an unparalleled opportunity to buy assets at cheap prices. That's been what has driven our support for a lot of the placements."

Elliffe was by no means certain the market had bottomed out, but "we're at the sort of valuation metrics where you're going to get good returns over time". He added: "We're in the camp that there's going to be a lot of money made in equities over the next five to 10 years."

Meanwhile, AMP's managed funds were negative for the three months ended March 31, with the conservative fund down 0.9 per cent, the flagship balanced fund down 3.6 per cent, and the growth fund down 6.1 per cent. Annually, they returned 5.9 per cent, minus 10.1 per cent and minus 24 per cent respectively.

Among asset classes, global fixed interest returned 2.1 per cent for the quarter, cash returned 1.3 per cent, and New Zealand fixed interest was flat.

New Zealand equities lost 3 per cent, unhedged global equities lost 8.2 per cent, hedged global equities lost 11 per cent, global property lost 28.2 per cent and property was up 0.9 per cent. All returns were before tax.

- AGENCIES