An analysis released by Navigator today reinforces the notion that performance is a key determinant of inflow shifts between asset classes, but other investor behaviour is not as easily explained.
An analysis released by Navigator today reinforces the notion that performance is a key determinant of inflow shifts between asset classes, but other investor behaviour is not as easily explained.
Mr Paul Northey, General Manager – Group Marketing and Distribution Development , said the analysis proved that investors were quick at ‘getting on the bandwagon' of a good performing asset class.
“What is more difficult to explain is that when an asset class delivers a poor investment outcome, inflows don't decrease by the same degree as what they increased by when the asset class was a good performer,” Mr Northey said.
“The international equities category received the highest investment returns for the 1998 calendar year of those categories on the Navigator list at that time. The following year, inflows to that category jumped from 6.9% to 10.6% of total Navigator inflows. In 1999 the sector repeated its title of best performer on the Navigator list, helping inflows jump to 22.6% in 2000,” he said.
“Then, in 2000, 2001 and 2002, the international equities category received the lowest investment returns of those categories on the Navigator list and inflows only dropped to 19.6% in 2001 and 17.4% in 2002,” he said.
The pattern is repeated in the property security sector, which in the 1999 calendar year experienced the lowest investment returns of the categories on the Navigator list at that time. This led to a decrease in inflows to that category from 3.9% to 0.1% in 2000. “Then, for two years running, property security received the highest investment returns of categories on the Navigator list. Inflows to that category increased to 5% of total Navigator inflows in 2001 and 11.4% in 2002,” Mr Northey said.
“Investors seem to be quick at ‘getting on the bandwagon' of a good performing asset class, but don't seem to react to the same degree when the asset class underperforms,” he said.
-ends-
For further information, please contact:
Simon Morgan, Group General Manager Public Affairs
(03) 9829 8892 / 0407 966 632
Do inflows follow performance?
| Navigator Investment Categories | % overall Navigator inflows | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | |||||
| Diversified Growth | 24.3% | 24.0% | 29.0% | 22.7% | 10.2% | ||||
| Global Int Equity | 6.9% | 10.6% | 22.6% | 19.6% | 17.4% | ||||
| Aust. Equity Growth | 6.2% | 15.2% | 21.5% | 18.7% | 14.7% | ||||
| Aust. Equity Imputation | 18.1% | 21.1% | 11.9% | 15.5% | 17.3% | ||||
| Property Security | 8.5% | 3.9% | 0.1% | 5.0% | 11.4% | ||||
| Aus Equity - Smaller Comp. | 0.6% | 1.8% | 3.5% | 4.2% | 5.1% | ||||
| Diversified Balanced | 5.6% | 8.8% | 3.1% | 3.6% | 4.1% | ||||
| Fixed Interest - Australian | 3.3% | -0.1% | -0.2% | 3.2% | 3.6% | ||||
| Fixed Interest - International | 2.7% | 0.6% | -0.3% | 0.5% | 1.0% | ||||
| Diversified Aggressive | 0.0% | 1.4% | 5.8% | 2.1% | 0.3% | ||||
| Diversified Income | 8.3% | 3.0% | -1.5% | 1.0% | 4.5% | ||||
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Notes to editors:
- Inflows are calculated on a gross basis and include switches.
- Aviva Australia Ltd is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners, the Australian funds management arm of Aviva plc, is a sister company. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Aviva Australia is part of Aviva plc, the world's seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is the worlds seventh-largest insurance group and the biggest in the UK. It is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$68.32 billion, and more than A$488 billion of assets under management (as at 1 July 2003). The group has more than 59,000 employees and 25 million customers worldwide.
- The information in this document reflects Norwich Union Life Australia Limited's ('NULAL')/Navigator Australia Limited's ('Navigator')/NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances. The securities advice or information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.
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