Australian shares boost fund performance

By Michael Bailey

Balanced funds that were overweight in Australian shares performed best last month, as the ‘January effect’ lifted the local bourse but passed over the US and Japanese exchanges.

The ASX 200 rose 1.4 per cent over the month, helping Perpetual’s Balanced Growth Pooled Superannuation Trust (PST), which has a 47 per cent exposure to Australian equities, to a gross 1.8 per cent return. This was enough to top both the Mercer Pooled Fund Survey and the InTech Growth Fund Survey.

Despite the performance of the Australian market, the median pooled growth fund returned 0.5 per cent before fees and tax over the period, largely as a result of the US and Japan, where a traditional boost to returns in January did not materialise.

International markets fell 1.1 per cent over the month, with the US down 2.4 per cent and Japan dropping 1.4 per cent.

However, InTech consultant Andrew Korbel warned investors not to feel too let down after the double-digit party of 2004.

“While it is natural to feel like things are travelling slower than they have been, any disappointment associated with the slowdown in returns is unwarranted,” he said.

“2004 was an above average year for growth-oriented investing and it is not realistic to expect double-digit returns to continue unabated.”

He reminded investors that this month’s return was a reversion to the expected long-term return from a growth fund — about 7 per cent before fees and tax.

Macquarie Funds Management’s growth fund finished second over the month with 1.2 per cent, and ANZ’s multi-manager fund returned 1.1 per cent.