Multi-sector funds take big hit

Multi-sector managed funds have made a disastrous start to 2008 on the back of the global credit crunch and sliding economic growth prospects, according to ratings house Morningstar.

It said that large negative returns from most asset classes had weighed heavily on the multi-sector funds, which recorded their worst performances in a decade.

“Domestic markets fared worst — the listed property sector fell almost 20 per cent over the quarter, while the share market overall was down around 15 per cent,” the Morningstar analysis said.

“International asset classes were not much better, the only positively performing managed funds being those invested in cash and bonds.”

The analysis said that the performance numbers for large cap share funds were a story of the least badly performing options, with the best over the quarter having been the Advance Sharemarket Fund, which after years of disappointing performance had returned to form in the downturn.

It said the Advance fund had declined 9.90 per cent over the quarter and therefore outperformed the index by 4.70 per cent.

Morningstar said that another value manager, Tyndall, had also put in a relatively good quarter, with its Australia Share Portfolio returning minus 11.47 per cent.

It said that value managers had overall outpaced their growth rivals by around 2 per cent over the quarter.

Looking at the small cap funds, Morningstar said the game might be over for the market darlings of the last few years, with small cap stocks taking the brunt of the market downturn.