Best Australian equities funds revealed
The Perennial/IOOF Value Shares Fund, Investors Mutual Industrial Share Fund, Deutsche Australian Equities Alpha Fund and Citigroup equity Trust have maintained their position from last year as the best Australian equity funds on offer according to an annual review of the sector by research house Lonsec.
All four funds received a ‘Highly Recommended’ rating along with a fifth fund, Ausbil Dexia, which was reviewed by Lonsec for the first time.
Of the other 27 funds formally rated in the annual review, 14 received a ‘Recommended’ rating, eight received ‘Investment Grade’, three ‘Hold’ and two ‘Redeem’.
UBS was the only fund to be downgraded from “Highly Recommended’ to ‘Recommended.”
“This was due to concerns about personnel turnover and the large funds under management size of the manager,” a report on the review said.
The worse performing funds were deemed to be the ING Australian Share Trust and Credit Suisse Australian Shares Fund, which were both placed on ‘Redeem’.
Lonsec says these downgrades reflected the industry’s “loss of conviction in the managers’ ability to add value above the benchmark.”
Key trends in the Australian equities sector identified in the review included a general reduction in tracking errors from an average of 2.9 in 2003 to 1.9 in 2004.
“This comes down to overall market conditions,” Lonsec analyst Brett Chatfield said.
“Stock prices are moving broadly in the same direction as the index so it is harder for fund managers to find excess returns.”
Lonsec also said small caps are continuing to outperform large caps, with the S&P Small Ordinaries Accumulation Index recording 24.8 per cent for the year to July 2004, compared to 17.7 per cent achieved by the S&P/ASX 100 Accumulation Index.
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