Managers follow market into red

By Ross Kelly

POOR returns in the materials and financial sectors have caused the Australian sharemarket to register an overall negative return on a month-by-month basis for the first time in 10 months.

According to Intech Investment Consultants, the Australian sharemarket retreated 1 per cent in March largely due to materials declining 4.2 per cent and financials declining 1.5 per cent. The energy sector resisted the downward pull, increasing by 6.7 per cent.

The market downturn has hit fund managers hard — in March only four managers were able to generate a positive return, Intech said. The top three managers for the month were Portfolio Partners (0.6 per cent), MIR (0.2 per cent) and IOOF (0.2 per cent).

But over the whole financial year, fund managers have generally faired far better thanks to record returns in 2004.

Over the financial year, the top three managers are Platypus (33.2 per cent), MIR (31.1 per cent) and Colonial First State Leaders (28.2 per cent).

The median investment manager in the Intech survey slightly underperformed in March. Managers with a higher weighting to small caps and mid caps were found by Intech to have consistently outperformed the benchmark, as ex-Top 100 stocks beat their bigger counterparts in the 12 months to March 2005.

“In general, this has been an environment to favour the smaller ‘boutique’ managers,” the Intech report said.

A greater proportion of boutique managers generally work in the mid to small caps space.