Mixed results for trusts

Press, 20 December 1988, Page 40

Mixed results for trusts

' According to Tower Trust’s December Investors Bulletin, the last four months have seen mixed results for unit trusts.

Those with New Zealand equity content; the Tower New Zealand Equity Trust, and Tower Multi Sector Fund, have slipped back while the Tower Property Growth Trust has marked time. The Tower Global Fund, however, has recorded worth-while improvements in unit prices and the Tower Mortgage Income Trust has produced an excellent result in its first quarter of operation.

Tower Trust’s managing director, Peter Baynes, believes that the outlook for next year is better than one would believe

from the negative comments which always seem to attract the media coverage. “The world economy undoubtedly has its problems, but I do not believe they are any worse than they were two or three years ago and, indeed, there is a greater awareness now of the issues which need to be addressed.

“I expect the international economic environment to be one of continued, although moderating, growth for at least the next 12 months and probably into the early 19905.” Mr Baynes expects these conditions will provide a favourable backdrop for a modest, but sustainable economic re-

covery in New Zealand which may have already started.

“Certainly when one looks at the present wide range of economic indicators and business opinion surveys, there are grounds to be optimistic about an economic recovery next year, albeit one which might be accompied by continued high unemployment,” One might expect that any economic recovery will be accompanied by strong corporate profit growth as the substantial advances in productivity that have been achieved during this recession, flow through into corporate profits. This situation will obviously be good for share values.

“Whether the process of

recovery is assisted by the Government recovering its sense of direction in economic policy is less clear. But perhaps in time the financial markets will come to understand that in a democracy, economic policy cannot always be unidirectional.

“By comparison with most democratic nations, the watering down and reversal of Government policy in New Zealand in recent times is relatively limited, and its significance is well overstated by professionals in the finance markets. “The markets need to look more to the substance of the outcomes rather than the process by which they were reached,” Mr Baynes said.