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Global equities remained the stand-out asset class for NZ investors during the September quarter in a period favouring core and value styles over growth, according to the latest Melville Jessup Weaver (MJW) survey. Median wholesale international share fund quarterly returns (presented in gross terms) in the MJW sample ranged from 7.1 per cent for the growth cohort to 12.5 per cent in the core group: value managers average 12 per cent for the three-month period where the MSCI All Country World Index (in NZ dollar terms) registered 12.5 per cent. For the 12-month period, global equities index performance topped 28 per cent while the median core and value managers covered by MJW returned well over 27 per cent. However, the growth-focused offshore shares fund managed by Australian firm, Hyperion, recorded the highest 12-month result of more than 50 per cent followed by the AllianceBernstein value fund (33.8 per cent) and the core BT-badged Northern Trust factor-based strategy (32.5 per cent). The long-suffering emerging markets share sector outperformed for the quarter with a benchmark return of 15.7 per cent and annual figures in line with broader global indices of 28 per cent plus. Among the five emerging market funds in the MJW survey, the median quarterly return landed at 15 per cent and almost 28 per cent for the 12-month period. By contrast, the MJW-tracked NZ share funds were up on average almost 5 per cent for the quarter and 6.4 per cent over the 12 months to September 30 – albeit across a wide dispersion of returns. MJW senior investment analyst, William Nelson, says in the report: “New Zealand shares delivered a [benchmark] return of 5.8% for the quarter. While this would often be considered an impressive result, it nevertheless lagged most other share markets. New Zealand has suffered from weaker economic growth due in part to the National government’s more austere approach.” Adding Australian stocks – especially small-caps – to the portfolio generally helped NZ share managers spruce-up returns, the data shows. But the complete set of asset classes in the MJW survey from fixed income to property and infrastructure turned in healthy results for the quarter with everything in the black for all periods dating back to 10 years. The non-stop run of global shares, and the US tech-heavy market in particular, has sparked widespread concerns about potential bubble-formation, however, Nelson says while valuations do look stretched “it is worth noting that the strength of the current bull market is not unheard of”. He says the “cumulative gain” of MSCI World Index since the last negative calendar year for the benchmark in 2022 has spiked to a high of 71 per cent. “However we have seen numerous examples that are more extreme; for example the six consecutive positive years 2011 to 2017, which saw a gain of nearly 120%,” Nelson says. “Thus, calling the top of the current bull market would be bold.” Meanwhile, the MJW survey found the KiwiSaver market – unsurprisingly – in similar upbeat mode with median quarterly diversified fund returns ranging from 2.7 per cent for the conservative category to 6.1 per cent in the growth cohort: respective 12-month returns spanned from 5.7 per cent to 13 per cent. The BlackRock-advised ASB KiwiSaver claimed top honours for the growth, balanced and conservative sectors in the quarterly and 12-month periods – and even over three years for the latter category. AMP, also a BlackRock-associated scheme, recorded the best performance in the MJW moderate diversified fund sector for the quarter as well as the one- and three-year timeframes. Despite sliding in the shorter-term rankings, Milford retains the best five- and 10-year returns across conservative, balanced and growth.
