For the first time since 1995, all asset classes provided a higher return in 2004, than in the previous year.
For the first time since 1995, all asset classes provided a higher return in 2004, than in the previous year.
According to Stuart Fechner, Navigator research manager, this means that no matter where investors had their money in 2004, most should have done better than the previous year of 2003.
Asset class performance 2004 versus 2003 (index returns as noted):
| Calendar Year | Aust shares | Int’l shares | Listed Property | Aust Fixed Interest | Int’l Fixed Interest | Cash |
| 2004 | 27.9% | 9.9% | 32.2% | 7.0% | 8.7% | 5.6% |
| 2003 | 15.0% | -0.8% | 8.8% | 3.1% | 5.3% | 4.9% |
Note – Above returns are reflective of those provided by the following indices:
Australian shares: S&P/ASX 300 Accumulation Index
International shares: MSCI World ex Australia net Accumulation index (unhedged)
Listed Property: S&P/ASX 300 Property Trust Accumulation index
Australian Fixed Interest: UBSWA Composite Bond All Maturities Index
International Fixed Interest: JP Morgan Global Government Bond Index (hedged in $A)
Cash: UBSWA 90 Day Bank Bill Index
Navigator Research has reviewed the fund flows into asset sectors during 2004 via the Navigator Platform finding an increase to the growth asset classes compared with 2003.
A significantly stronger return was provided in 2004 from both Australian shares and listed property, with international shares also a noticeable improver, moving from negative territory to providing almost a 10 percent return.
"Australian shares saw the largest increase in fund flows as a proportion of total inflows. Much of this may have been on the back of this asset class providing the best return in 2003. Blindly following last years best performer can be dangerous and will not ensure success, however, it proved to be a good strategy over the past year," Stuart said.
"The Australian equity market not only performed well across the full year but also provided quite consistent returns with 10 of the 12 months providing a positive return. On the back of this, inflows to Australian share funds as a proportion of total inflows increased by just over 4.0 percent from 32 percent in 2003 to 36 percent in 2004. This means a little over one third of all money invested via Navigator was directed to an Australian equity fund," he added.
Strong returns, however, did not necessarily mean an increase in inflows. Both listed property funds and small company funds provided strong returns in 2004 (the S&P/ASX Small Ordinaries Accumulation Index returning 26.6 percent), but inflows as a percentage of overall fund flow via Navigator fell.
"Flows into both listed property trusts and small company funds fell by around 1.5 percent for each of these investment categories. It has been broadly felt within the market that both sectors have been fully priced for the past 12 to 18 months. It’s not surprising to see some investors may have taken profits after another year of strong above average returns," Stuart said.
Other areas of fund flow identification in 2004 proved to be the continuance of trends that were seen in 2003.
"Support for hybrid/high yield funds increased by over two percent in 2004. These funds were utilised by many in preference to traditional Australian fixed interest funds in seeking to enhance the level of income within a portfolio. Related flows to Australian fixed interest funds decreased by almost two percent.
"Flows to boutique fund managers continued to gradually increase. This was particularly evident for those managers offering funds that paid less relevance to managing the fund in line with any benchmark index," Stuart said.
One product type with a decrease in flows was diversified funds, following a general trend over the past two to three years.
"Increasingly we have seen specialist sector funds grow in popularity over more traditional diversified funds. The use of sector funds tends to provide a greater level of flexibility in both constructing and updating an overall portfolio and also allows the choice of fund manager that is viewed as being one of the best in each respective asset class. It is difficult for a fund manager to be one of the best across all asset classes," Stuart said.
In identifying which individual funds received the highest level of support within some of the major asset classes, little changed when comparison was made with 2003.
"In the asset classes of Australian shares, international shares, listed property and mortgages the most utilised funds proved to be a mirror image of 2003. These were Perpetual’s Wholesale Industrial Share Fund, the Platinum International Fund, the APN Property for Income Fund and the Howard Wholesale Mortgage Trust, respectively," Stuart said.
Stuart Fechner is available for interview on 0407 839 080.
For further information, please contact:
Simon Morgan, Group General Manager, Public Affairs
PH - (03) 9829 8892 MOB - 0407 966 632
Notes to editors:
- Aviva Australia 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 world’s 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.
- Applications to invest in a financial product issued by NULAL/Navigator/NULIS or any of its related entities must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Investors should consider the PDS before making an investment decision or deciding to continue to hold a product.