The slump in stockmarkets late last year has snapped the winning streak for Australia’s huge managed fund industry.
For the first time since 2003, total consolidated assets of managed funds eased: down $7.7 billion or 1% on September 2007. It was the first fall since March 2003 at the depths of the last big correction in local markets.
Investment funds offered to the public by banks and other managers did poorly, worse than super funds, which are mostly offered to employees of public and private companies.
It’s the first industry-wide snapshot of the impact of the rise in risk aversion and volatility from the subprime mess and credit crunch we have seen.
Our stockmarket peaked in late October and November, so the fall in asset values reflects around seven weeks or falls.
The figures for this quarter will be far more substantial, even after the 5% rise in the market in the past week because it is still down around 10%.
The Australian Bureau of Statistics said today that “total consolidated assets of managed funds institutions were $1,361.6 billion at the end of December, thanks to falls in the assets held by public unit trusts, cash management trusts, common funds and life offices.”
Only super funds did better with assets up 0.1%, or $500 million.
Life insurance offices assets fell $3.7 billion, or 2%, public unit trusts decreased by $3.5billion, or 1%, cash management trusts fell by $800 million, or 2%, common funds fell $100 million, or 1%, and friendly societies remained virtually unchanged.
Reflecting the slump in the stockmarket, the ABS said the bulk of the loss in value was in equities and trusts:
Investment in equities and units in trusts decreased by $14.5 billion (2%) and cash and deposits decreased by $3.0b (3%).
Other decreases were recorded in land and buildings, down $1.8b (1%) and long-term securities, down $1.7b (2%).
Increases occurred in assets overseas, up $12.0b (4%), and short term securities, up $1.2b (1%). During the December quarter 2007, the S&P/ASX 200 fell 3.5%, the price of foreign shares (represented by the US S&P 500) fell 3.8% and the A$ remained static against the US$.
Investment managers had $1,258.0b in funds under management at 31 December 2007, down $11.6b (1%) on the revised September quarter 2007 figure of $1,269.5b. They managed $874.8b (64%) of the consolidated assets of managed funds institutions.