Cash and international shares appeal
The head of Vestar's investment committee, Donal Curtin, says that New Zealand cash and international equities are the two most promising asset classes at the moment.
Tuesday, March 27th 2007, 6:54AM
He says the only developed country in the world to have a higher cash rate than New Zealand is South Africa.
One sector Vestar is looking at pulling out of is listed property. This sector has performed very well over the years but in the past couple of months has had a significant re-rating. Under the new Portfolio Investment Entity tax rules due to start in October there is a benefit to shareholders, which is already reflected in the price.
While Vestar is looking to pull money from this sector, it says there are still some opportunities here.
Curtin says Vestar is wary on local shares as the market has run so well over the years and it is looking pricey.
“What was a really good asset has become really pricey.” Compared to other countries investors are having to pay relatively higher price/earnings ratios for average growth.
He says it is possible to pay less for high growth companies in other countries such as Korea.
International equities also have the attraction of additional gains once the New Zealand dollar starts retreating.
“We are making a higher than usual allocation to international shares.”
International fixed interest is currently unattractive.
Curtin says Vestar haven’t been using some of the alternative asset classes, such as hedge funds, but are starting to look at these.
The issues the investment committee aren’t thinking about is the sub-prime market in the United States and the sharemarket in Shanghai. Curtin says these are distractions and shouldn’t be worrying investors.
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