Mercer highlights leading sector

Mercer’s sector survey for the 2006—07 financial year has found the Standard & Poor’s/ASX 300 rose 29.2 per cent, up 150 per cent over four years, due to a strong local economy, low interest rates and global economic growth.

It identified the industrials sector as the leading source of returns, returning 40.8 per cent this year, followed by the information technology sector, on 54.8 per cent but only accounting for 1 per cent of the Australian market, and telecommunications, returning 40.1 per cent.

The energy sector produced the lowest returns, rising 22.2 per cent but comparing unfavourably with 2005-06 (34.7 per cent) and 2004-05 (67.2 per cent).

Overseas shares (unhedged) returned 7.8 per cent, held in check by the burgeoning Australian dollar, while their hedged counterpart returned almost 25 per cent, helped by good returns from Europe and emerging markets.

The research showed that over the year, the average active overseas shares manager outperformed the index by 0.9 per cent.

Germany was the standout international economy, with its DAX 30 delivering a return of over 40 per cent. This contrasts with the Japanese market, where the Nikkei 225 was up 17 per cent.

In total, emerging markets returned 27 per cent for this financial year, compared with 39 per cent last year and 22.8 per cent in 2004-05.

The top five overseas managers were Macquarie Arrowstreet, Bernstein Strategic Value, Orbis, Bernstein Value and Perennial High Alpha.

At the bottom of the scale were ABN Amro, BIAM Ethical (SRI), BIAM, UBS and Marvin & Palmer.