Emerging markets steal the limelight

Funds investing in emerging markets and Asia proved to be the big winners in 1999, ac-cording to the latest Morningstar research.

Funds investing in emerging markets and Asia proved to be the big winners in 1999, ac-cording to the latest Morningstar research.

The Morningstar survey of New Zealand based managed funds found emerging market funds accounted for seven of the top ten unit trusts and group investment funds, and four of the top ten superannuation trusts based on returns to the end of December 1999.

Top of the list was the Sovereign Super Far East fund which returned over 100 per cent for the year, followed by the New Zealand Funds Management Global Emerging Markets Fund which returned almost 70 per cent for the same period.

“Only one of the ten top unit trusts and group investment funds was not invested in emerging markets or Asia - the New Zealand Guardian Small Companies Fund, which returned a 27.80 per cent total return for the quarter and a 52.10 per cent return for the year,” Morningstar says.

Last year was a good year for active managers, according to the survey, with all top ten unit trusts/group investment funds filled by funds using active management.

The best performing unit trust or group investment fund for the quarter to December 1999 was the HCM Global Technology fund which returned close to 50 per cent. The HCM fund has only been open for nine months and has already achieved a return of almost 80 per cent for that period.

However, another HCM fund experienced a particularly bad 1999.

“In a rollercoaster ride for HCM Global, the HCM Global Asset Fund was one place away from the wooden spoon award for lowest performer for the quarter and year, pro-ducing total returns of -7.04 per cent and -15.25 per cent respectively,” Morningstar says.

Only 13 of the 198 unit trusts and group investment funds surveyed by Morningstar pro-duced negative returns for the December quarter while 31 showed a negative return for a year’s effort.

The losers were dominated by funds investing in New Zealand and International fixed interest and property, with the worst result for the year achieved by Direct International Equity Trust at -53.58 per cent.

This situation was mirrored by the performance of superannuation trusts with 22 of the 229 trusts surveyed showing negative returns for the year, most of these places filled by fixed interest and property funds.

Best performing superannuation trust for the December 1999 quarter was the Tower FreedomPlan showing 33.33 per cent returns compared to number ten on the list, Arm-strong Jones SIL 60s+ International Share fund returning 18.57 per cent.

“The Armstrong Jones SIL 60s+ International Share fund was the only internationally diversified equity fund to make the top ten superannuation trusts for the December 1999 quarter or year,” Morningstar says.