Spooked investors pull their cash out of managed funds

By MARK FRYER personal finance editor

Disillusioned investors have voted with their chequebooks, pulling a record amount out of managed funds in the three months to the end of June.

For "retail" managed funds - those open directly to individual investors - withdrawals exceeded new investments to the tune of $83.5 million.

Researcher FundSource says that is the largest quarterly net outflow recorded in the nine years it has been collecting the information.

The figures are a marked turnaround from the previous quarter, when managed funds enjoyed a net inflow of $59.4 million.

Thanks to the withdrawals, and falls in the value of existing investments, the total value of New Zealand-based retail managed funds fell by $765 million in the three months, to $18.16 billion.

Worst hit were diversified funds, suffering a net outflow of $183 million, a result FundSource puts down to the damage that falling international share prices have inflicted on diversified portfolios.

Global and regional share funds were also down (net outflow $32.9 million), as were New Zealand share funds ($2.6 million). Even the haven offered by New Zealand cash funds was not enough to retain investors, with that sector suffering a $9 million net outflow.

About the only ray of sunshine for managers was offered by mortgage trusts, which attracted a net inflow of almost $155 million.

But the pain was far from evenly spread, with three managers attracting solid inflows while others suffered.

ASB Bank, had a net inflow of $58.6 million during the quarter, followed by the National Bank ($54.9 million) and NZ Funds Management ($11.8 million).

The same three managers also attracted the most money in the previous quarter.

However, 18 of the 29 managers which FundSource surveys suffered outflows, and the remaining eight shared a net inflow of $22 million.

The big losers in the latest quarter were Tower, hit by a net outflow of $49.3 million, and Royal & SunAlliance ($39.7 million).