NZ Share Selection Crucial in First Quarter, says Russell (Russell.com)

NZ Share Selection Crucial in First Quarter, says Russell

AUCKLAND, 5 April 2004 — The performance of the New Zealand share market in the first quarter of 2004 meant selecting the right companies and industry sectors was the key to investment success, according to investment services leaders Russell Investment Group.

The NZ share market performed solidly during this quarter, returning 5.7%. But returns from individual shares in the NZSX50 Index varied widely, ranging from over 20% (Tower and Fisher & Paykel Appliances) to less than -15% (Air New Zealand and Warehouse).

In fact, as many as 14 of the securities in the index delivered a performance that was more than 10% better or worse than that of the market as a whole.

"This is in line with the normal range of performances that can be expected over a three month period. Holding too few shares clearly exposes investors to the risk of significant underperformance," commented Russell New Zealand Consultant, John Williams.

Further analysis reveals that larger companies generally did well, led by Carter Holt Harvey (19%) and Telecom (9%). Nonetheless there were strong showings by a few smaller stocks, notably Trust Power, Michael Hill and Tourism Holdings, which all returned over 10%.

Picking the right industry sectors was as important as share selection in generating strong performance.

Materials stocks averaged a 14% return, with Carter Holt Harvey, Fletcher Building, Tenon and Nuplex all benefiting from a buoyant building sector.

Financials also did well, notably insurers Tower, AMP and Promina.

By contrast, Consumer Discretionary stocks struggled, with negative returns from The Warehouse and Sky Television.

"Spreading risk across a broad number of shares and industry sectors is a fundamental requirement in tempering the range of returns an investor receives," Williams said.

About Russell
The Russell Investment Group, a global investment services firm, provides multi-manager investment products and services in more than 35 countries and has been researching investment managers for more than 30 years. Worldwide, Russell manages over NZ$149 billion in assets and advises clients representing approximately $3.0 trillion.

In New Zealand, Russell advises on more than NZ$14 billion in assets and invests around NZ$1.0 billion for New Zealand investors in Russell Funds.

Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Washington, USA with additional offices in New York, Toronto, London, Paris, Amsterdam, Singapore, Sydney, Auckland, Tokyo and Johannesburg.

This document provides general information only. It has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. Frank Russell Company, a Washington, USA Corporation, operates through subsidiaries worldwide. This news release is issued by Russell Investment Management Ltd ACN 068 338 974.