Summer Australian Equities fund performance summary as at 31 December 2021.
Unit price (as at 31 December 2021): $1.5636
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
See the Australian Equities page for the Summary of investment objective and strategy.
|PIR||Total since inception (annualised)||1 Month||3 Month||1 Year||3 Years^|
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.
|Asset name||% of fund net assets|
|2||Westpac Banking Corporation Ltd||5.02%|
|3||BHP Group Limited||4.88%|
|4||Commonwealth Bank of Australia Limited||4.87%|
|5||ANZ transactional bank account||3.23%|
|6||National Australia Bank Ltd||2.94%|
|7||Australia and New Zealand Banking Group Limited||2.76%|
|8||Rio Tinto Ltd||2.62%|
The top 10 investments make up 38.94% of the fund.
After a significant decline in the final week of November when news of the Omicron Covid variant swept through the market, the broader Australian equity market index enjoyed a strong December. Strong economic data in October saw bond yields surge before giving up much of those gains on Omicron concerns late November and in the earlier part of December.
The Materials (mostly consisting of Commodities) +12.44%, Utilities +10.02% and Real Estate +8.18% sectors posted the strongest performance, with the Energy -8.82%, Information Technology -6.14% and Financials -3.35% sectors lagging the market index. All percentages in this paragraph are in local dollar terms.
The Summer Australian Equities delivered a return of 1.95% (28% PIR) in the quarter under review and a CYTD return of 13.81% (28% PIR).
Key contributors to underperformance over the month were overweight exposures in Westpac Banking Corp, Emeco Holdings, Insurance Australia Group and Downer EDI. Overweights in outsourced salary packaging companies McMillan Shakespeare, and SmartGroup Corp also cost performance, the latter as the Board rejected a revised proposal from TPG Global, LLC. and Potentia Capital at a reduced offer price of A$9.25 per share in cash (previously A$10.35 per share). The share price as at time of writing sits some 17% below this revised price.
Key positive contributors to performance included overweight exposure in Senex Energy (under take-over offer), CSR, and newly listed Vulcan Steel and underweights in Afterpay, Commonwealth Bank, and Domino’s Pizza. Commonwealth Bank and Westpac both sold off on weaker than expected results as a competitive pricing environment impacted margins and, in the case of Westpac, operating costs exceeded expectations.
The portfolio is positioned for inflation and higher interest rates. Both the Reserve Bank of Australia (RBA) official cash rate and longer term bond yields in Australia lag New Zealand by a wide margin. We expect current economic momentum in Australia to continue through 2022 with capacity and supply chain pressures following a similar pattern to that experienced in New Zealand throughout 2021. Despite the Omicron setback we expect interest rates to continue to increase and likely quicker than the RBA forecast. An inflationary environment favours firms with pricing power, and those with cashflows and valuations less sensitive to rising discount rates.
We actively manage the fund’s foreign currency exposures. As at 31 December 2021, the fund’s foreign currency exposures represented 97.20% of the value of the fund. After allowing for foreign currency hedges in place, approximately 62.71% of the value of the fund was unhedged and exposed to foreign currency risk.
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.