Nothing Like Distorting The Facts


I hadn’t heard of the Grosvenor Group before — it looks like they are yet another bunch of KiwiSaver and managed fund pushers.

Much like others in the field, they do their best to prove that property is useless and only by putting YOUR money into THEIR funds will you grow your wealth — and theirs, incidentally. (Nothing wrong with that.)

BUT, their reasoning as outlined in the article in the NZ Herald, (‘Investment: Research pumps shares’ – see below) as I understand it, seems hopelessly flawed. Let me explain.

1. They only compared returns from the top 50 shares on the index when they should have  taken an average ALL the listed shares including the penny-dreadfuls.

2. They took the median price of NZ property over the past 40 years … which would include all the hovels, broken-down baches and ghost towns throughout the country, and then of course conveniently forgot the rental return that many produce.

If you want to compare apples with apples, then by all means use the Top 50 shares on the index … and compare them with the top 50 streets or suburbs in the country. Then you would get a fairer comparison.

I am sure the figures would change dramatically if this were done.

If this is the sort of distorted and biased ‘research’ that this Grosvenor Group can produce, I suggest you seek an urgent second opinion elsewhere before investing with them.

Investment: Research pumps shares

By Tamsyn Parker, NZ Herald Wednesday Sep 12, 2012
Study finds 40-year return on stocks more than twice that of property

… Grosvenor director Peter Christensen says a $10,000 investment in New Zealand shares in 1971 would have been worth $787,128 at the end of last year.

Investors would have been more than two times better off putting their money into the local sharemarket than residential property over the past 40 years, according to research by KiwiSaver provider Grosvenor Financial Services Group.

Grosvenor director Peter Christensen says a $10,000 investment in New Zealand shares in 1971 would have been worth $787,128 at the end of last year – an average of 11.2 per cent growth a year. The same amount of money invested in houses would have grown to $367,352 – an average annual return of 9.2 per cent. …

link: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10833372

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