It brings to light the general yield-seeking trend
Wellington-based platform InvestNow has revealed that New Zealand investors tilted to property, passive in 2019.
Its new analysis of flow data found that investors surged into listed property funds this year, with the proportion of InvestNow members with property funds jumping from 17% to 33% over the last six months to September 30.
Mike Heath, InvestNow general manager, said the swing was understandable due to the general yield-seeking trend.
“In one sense the growing appetite for listed property funds is not so surprising as they tend to offer higher income that investors value more in this low interest-rate environment,” Heath said. “Even so, we were surprised to see the real estate fund investor numbers double over such a short time period.”
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InvestNow also found a 33% increase in members’ overall allocation to fixed income funds during the six-month period – with around 12% of investors on the platform having fixed income fund (bond) holdings on September 30 compared to only 9% in the previous six months.
“Over the six months to September 30 we saw average funds under management [FUM] for customers invested in these income products rise by almost 30 per cent,” Heath said. “Clearly, investors already holding income funds have been pleased with how the products performed.”
“The other trend we are following very closely is with regards to the bank term deposits we offer,” he continued. “There is a clear preference for the six month term, but is this rate lead or simply that most customers are happy for their cash to be locked up for no more than six months? Plus it will be interesting to see where term deposits sit alongside income funds for our customers looking for income from their portfolio.”
“InvestNow has a healthy mix of both active and passive funds. While index investing has always been popular among our customers, the upward trend over the year is an interesting development,” Heath concluded.
