Even before the knock-on effects of the Asian currency crisis, New Zealand's economy had begun to take on a much less rosy hue. The over-riding trend in the fund management industry is consolidation and retrenchment. The strong have preyed on the weak in what IPAC Securities describes as a battle of attrition, in marked contrast to the global trend of acquisition for growth".

Managed investments take the form of unit trusts or insurance bonds. The market is approximately NZ$15bn ($8.7bn) in size. It is notable for the presence of international names, but many of these have been among the casualties in 1997. BZW Investment Management ceased trading and was acquired by Guardian Trust. Southpac Investment Management was bought by AMP Investment.

Given the relative size of the market, domestic investors tend to concentrate their attention on the more substantial Australian market.

The top performing funds are predominantly invested in Australia. According to the fund management adviser Infofund, the top 10 performing domestic funds over five years include three from Bankers Trust, two from First State, the Mercantile Emerging Companies Trust, Jardine Fleming Australia, Rothschild's Australian Smaller Companies and Equitilink's Safelink fund.

Passive funds are beginning to be introduced into New Zealand. The first AMP Tracker fund was the first such launch in February 1997. National Mutual has just launched the Kiwi Share Index Fund. Both funds are based on the Russell/Ord Minett Tradeable Index and have management fees of around 0.75%."