Investors continue 'flight to quality'
Growth funds were down over the second quarter of 2012 while income-focused options fared better in a market where investors sought more defensive funds, according to Morningstar's latest managed fund performance report.
Taking the brunt off market declines, small-cap Australian funds lost 10.02 per cent as a result of 'risk off' trade during the period, with small-cap resources stocks losing 26 per cent.
Large-cap Australian share funds lost 5.75 per cent on average in the June 2012 quarter, with growth funds faring the worst.
This was largely due to the fact that growth-style funds tend to favour resources, which were particularly hard hit over the quarter.
International share funds were also down over the quarter (5.02 per cent) as result of global sharemarket woes, although defensive positioning managed to perform better.
Listed property and bond funds were the stronger performers over the June quarter, with the average Australian listed property fund generating an 8.36 per cent return and the average global property fund increasing 3.05 per cent.
"Nearly all bond funds had a strong quarter as investors' flight to quality pushed high-quality bond yields down around the globe, but funds with the most interest rate exposure fared best," the report stated.
The average Australian bond fund rose 4.21 per cent, outperforming the international category which managed to gain 2.45 per cent.
Alternatives funds presented a mixed bag of return performance over the three months to 30 June, with the average fund down 2.33 per cent. This indicated that most vehicles in the category failed to offer a safe haven from market turbulence, according to Morningstar.
Recommended for you
Equity Trustees has paid three infringement notices issued by ASIC in which the corporate regulator alleged it made misleading statement about investments in a sustainable bond fund.
Only three active asset managers are forecast to see positive flows through to FY29, according to Morningstar, with those focused on specialist fixed income in the best position as investors move to defensive asset allocations.
Platinum Asset Management has provided an update on the possibility of a merger with asset manager L1 Capital following a period of due diligence.
Commentators may be forecasting consolidation in private market firms but a survey of the industry itself expects new manager formation will still outpace this, especially in Asia Pacific.
