KEY POINTS:
AMP Capital Investors' balanced funds turned in an "exceptional" performance in the December quarter but the firm says that may be as good as it gets for some time.
New Zealand's largest fund manager's balanced funds produced their second best set of returns in 15 years, thanks in part to an unexpected late year rally by the New Zealand sharemarket.
"We've ended up the year with fantastic fund performance from our listed and unlisted asset classes," said managing director Catherine Savage, who leaves the company shortly to pursue her own private equity interests.
New Zealand equity investments returned 13.7 per cent over the December quarter and 36 per cent over the year.
Hedged global property investments returned 14.2 per cent for the quarter and a massive 47.8 per cent for the year while hedged global equities returned 11.2 per cent over the quarter and 19.6 per cent for the year.
AMP's low risk fund returned 2.5 per cent for the three months ended December, its medium risk fund 5.1 per cent, and its high risk fund returned 7.3 per cent.
For the year, returns were 10.7 per cent, 17.1 per cent, and 23 per cent respectively.
"However, we cannot take these stellar returns for granted," said AMP Capital head of investment strategy, Leo Krippner.
"Returns were extremely strong in 2006, and we'd expect them to be more modest in 2007."
"New Zealand's growth rate is still lower than that of the rest of the world, so fundamentally we expect that New Zealand shares will not continue to perform as strongly as they have in recent times. In addition, global property and New Zealand shares have become expensive, so further gains from these sectors are unlikely going forward."
However, the company viewed the local non-residential property sector as "a hot prospect" following tax changes for PIEs which have already seen a healthy rerating for the listed property sector.
