Unit trust race on again

Press, 9 November 1988, Page 39

Unit trust race on again

By

DAVID HAY

The race is on, again, as far as unit trust performance is concerned. From October last year, most trusts with investments in shares have had their performance figures ruined by the effect of the crash in share prices. But from now on, the oneyear performance figures will show trust performance under current conditions. However, there are more new competitors in the race. The September, 1988, performance figures show more large losses for equity trusts. But some of the trusts have started to recover, and some performed better than the market average (shown by the 47.5 per cent fall in the New Zealand Stock Exchange gross index) over the year. The latest results include the Bank of New Zealand’s II trusts for the first time. The company has advertised some excellent results — for example, the BNZ Austra-

lian Equity Resources Trust, which, according to our results, achieved a net gain of 25%. However, that trust is not large, and the BNZ also has other trusts which achieved less attractive results. For instance, the BNZ New Zealand Blue Chip Equity Trust had a net decline of more than 40 per cent. As the performance figures show in the accompanying tables, New Zealand unit trusts have still not proved themselves as an investment. But there continue to be new trusts made available. The National Bank has introduced five new trusts; and Nathan Funds Management has brought out nine “strategic” trusts. They both have expert fund managers, and eminent directors. But neither group of trusts seems to provide an alternative that investors could not already obtain. Their main marketing advantages will be the

arrangements that allow them to be distributed through the bank’s branches, or through investment advisers associated with the strategic trusts. According to Nathan’s prospectus, “unit trusts have now become the most popular investment medium worldwide.” They are not a significant form of investment for New Zealanders. But, since there are now more than 40 New Zealand unit trusts, investment management companies seem to expect that they will be. Improved performance figures could be needed before trusts become the leading form of investment here. Unit trust performance is becoming more interesting. We could now start to see better results — at the same time as the unit trust market becomes more competitive. David Hay is a lecturer in professional accounting at Lincoln University College.

The above four tables are prepared and under copyright by David Hay. The top table measures unit trust performance over two years, and the remaining three tables apply to one-year performances for equity and other trusts, property trusts, and interestbearing investment trusts. “Performance” means the net increase in value, in New Zealand currency, taking into account selling fees, expenses, and distributions. ___________________

Two years ended September 30 Perf. Prior Trust % Rank s’vey Computrend Fut. 11.65 1 — NZI Aust Eq —18.53 4 (4) NZI Global Eq —5.26 2 (1) NZI NZ Eq —42.33 9 (8) Pac Inv Fund —20.83 6 (2) Prudential Eq —28.01 8 (7) Qtron Share Portf. —20.00 5 (5) Tower Global Fund —10.08 3 (3) Tower NZ Eq —24.76 7 (6) Period to September 30 Perf. Prior Equity, other trusts lyr % Rank s’vey BNZ Aust Blue Chip 10.07 3 (-) BNZ Aust Eq Res 25.36 1 (—) BNZ Int Eq 0.18 5 (-) BNZ NZ Blue Chip —42.33 11 (-) BNZ NZ Strat Invest —33.57 10 (-) BNZ Sagittarius 0.54 4 (-) Computrend Fut 10.88 2 ( 1) Countrywide Kiwi —6.67 6 (-) Countrywide S’markt —21.53 8 ( 3) NZI Aust Eq —45.85 13 ( 6) NZI Global Eq —15.72 7 ( 2) NZI NZ Eq —62.74 18 (11) Pacific Invest Fund —49.15 14 (10) Prudential Eq —53.70 16 ( 8) Qtron Gold —60.81 17 ( 9) Qtron Share Portf. —44.39 12 ( 5) Tower Global Fund —24.06 9 ( 4) Tower NZ Eq —52.08 15 ( 7) Period to September 30 Perf. Prior Property trusts lyr % Rank s’vey AMP Premium Prop —7.60 9 (-) BNZ Aust Com Prop 8.44 3 (-) BNZ NZ Comm Prop —4.48 8 (-) Countrywide Prop —2.61 5 (6) Mace Prop 8.49 2 (1) NZ Rural Prop 7.50 4 (2) NZI Prime Prop 9.92 1 (3) Qtron Prop —3.64 7 (4) Tower NZ Prop —3.12 6 (5) Period to September 30 Perf. Int-earning invest trusts 12mth BNZ Aust Cash Mgt 2.46 BNZ NZ Cash Mgt 4.28 BNZ NZ Fixed-Int 4.76