Summer Global Equities
Summer Global Equities fund performance summary as at 31 July 2024.
Fund at a glance
Unit price (as at 31 July 2024): $2.0704
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
For more information on the Summer Global Equities fund, read the latest quarterly fund update and the product disclosure statement.
Fund objective and strategy
See the Global Equities page for the Summary of investment objective and strategy.
Fund returns
| PIR | Total since inception (annualised) | 1 Month | 3 Month | 1 Year | 3 Years^ |
| 28% | 9.05% | 2.45% | 4.70% | 17.21% | 4.66% |
| 17.50% | 9.39% | 2.32% | 4.83% | 17.39% | 4.83% |
| 10.50% | 9.62% | 2.23% | 4.91% | 17.51% | 4.94% |
^ Annualised
Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the Prescribed Investor Rate identified above.
Top 10 investments
The top 10 investments make up 48.61% of the fund.
Manager's Commentary
What happened in the markets that you invest in?
Global shares reported a ~2% gain in July, making it the sixth monthly gain out of seven in 2024. Central banks in many countries have started to cut short-term interest rates or signalled that cuts will be forthcoming, particularly if inflation pressure continues a downward trend. Globally, growth stocks underperformed while value and small capitalization stocks advanced.
US earnings reporting has started for the June quarter. While still early days, earnings are coming in about 3% ahead of forecast but this is well below the level of ‘beat and raises’ seen over the previous six consecutive quarters.
In Asia, market performance was in-line with the global average. Japanese stocks experienced a rally as their central bank is still raising rates on the back of rising growth, versus most of the rest of the world seeing a growth slow down. Higher Japanese interest rates helped the yen to rise by 8% against the US dollar.
Conversely, European, UK and Chinese stocks underperformed, particularly in local currency terms, due to stalling economic growth rates.
How did your portfolio perform?
Summer Global Equities delivered a return net of fees and before tax of 2.11% for the month of July.
For the 12 months to the end of July, Summer Global Equities delivered a return net of fees and before tax of 17.69%.
Our low volatility manager outperformed our two growth managers. Minimum volatility tend to have a strong overlap with traditional value factors, particularly when growth stocks have high profit growth expectations are baked in.
Four members of the ‘Magnificent 7’ are yet to report second quarter earnings but capital expenditure is predicted to increase in these companies, raising concerns about future profit margins. Our positions in Equifax and Shin-Etsu Chemical added to performance as earnings surprised on the upside. Our underweight in Nvidia added value as the stock price declined 13% over the month.
Our currency hedging overlay was neutral for overall returns.
We actively manage the fund’s foreign currency exposures. As of 31 July 2024, these exposures represented about 99% of the value of the fund. After allowing for foreign currency hedges in place, around 39% of the value of the fund was unhedged and exposed to foreign currency risk.
What are we thinking about the future?
Markets have become nervous that the gentle slow-down in US economic growth could turn into outright recession as unemployment ticks higher. In Europe, the acceleration in economic growth appears to have stalled, while in China government initiatives have failed to revive the domestic economy.
Central banks are already acting to lower interest rates and provide some relief to borrowers. So far, these cuts have been measured as inflation is only just returning to normal and they do not want to ignite another round of demand driven inflation.
Overall, we think Central Banks will act quickly if true recessions - signalled by rapidly rising unemployment - take hold. Higher inflation being the lesser evil than facing significant economic and financial risks that a recession might expose.
When the consensus view transitions from one view to another – in this case a soft economic landing to a higher chance of recession - markets tend to see higher volatility.
Your portfolio remains well diversified, with a higher-than-average exposure to low volatility stocks, and an underweight position in the highest priced momentum stocks – the best example being our relatively low exposure to ultra large US tech companies.
This is not a recommendation to buy or sell any financial product and does not take your personal circumstances into account. All opinions reflect our judgement on the date of communication and may change without notice. Past performance is not a reliable guide to future performance. We recommend you take financial advice before making investment decisions. We have prepared this web page in good faith based on information obtained from other sources, but we do not guarantee the accuracy of that information. We do not make any representation or warranty (express or implied) that this web page is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this web page.
