Summer Australian Equities
Summer Australian Equities fund performance summary as at 30 June 2024.
Fund at a glance
Unit price (as at 30 June 2024): $1.9024
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
For more information on the Summer Australian Equities fund, read the latest quarterly fund update and the product disclosure statement.
Fund objective and strategy
See the Australian 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% | 7.69% | 1.55% | -1.11% | 11.68% | 6.97% |
| 17.50% | 8.07% | 1.53% | -1.06% | 12.11% | 7.40% |
| 10.50% | 8.33% | 1.51% | -1.03% | 12.40% | 7.69% |
^ 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 44.05% of the fund.
Manager's Commentary
What happened in the markets that you invest in?
The Australian equity market rose 0.92% in June, led by the Financials and Consumer Staples. Local bond yields fell slightly during the month despite a concerning re-acceleration in the monthly consumer price index (CPI) indicator for May. Market estimates were for a 3.8% YoY increase versus the 4.0% recorded.
The Reserve Bank of Australia (RBA) has for some time been amongst the least restrictive of Central banks, with a 4.35% peak cash rate versus the US, UK, Canada and NZ all in the 5.0% to 5.5% range. With re-accelerating inflation, this accommodative stance is being challenged; markets are now pricing around a 50% chance the RBA will need to hike the cash rate again before year end in response.
How did your portfolio perform?
Summer Australian Equities delivered a return net of fees and before tax of -1.48% during June. For the 12 months to the end of June the fund delivered a return net of fees and before tax of 12.84%. Key positive contributors were our overweight positions in diagnostic imaging company Capitol Health and the general insurer, Insurance Australia Group (IAG). Capitol Health surged on news of a proposed merger with a larger sector peer, Integral Diagnostics. The merger valued the business at an equity value of $350.6m, substantially above the pre-announcement value of around $260m. IAG performed strongly after securing a favourable reinsurance deal with Berkshire Hathaway, which should lower future earnings volatility.
Key negative contributors to performance were our overweight position in fuel retailer Viva Energy and our underweight position in major bank, Commonwealth Bank of Australia (CBA). Viva sold-off on the back of weaker margin expectations for their refining operations and potentially softer convenience store sales. CBA is the largest bank in Australia and a resilient Australian economy and benign credit environment have driven bank share prices higher. We view the CBA franchise as the highest quality in the sector, but struggle with its valuation.
We actively manage the fund’s foreign currency exposures. As at 30 June 2024, these exposures represented about 97% of the value of the fund. After allowing for foreign currency hedges in place, around 64% of the value of the fund was unhedged and exposed to foreign currency risk.
What are we thinking about the future?
With low unemployment, strong wage growth and substantial tax cuts on the way, we think the Australian consumer will remain relatively healthy and anticipate a slow grind down in inflation. The RBA have proven repeatedly they have no willingness to raise rates further, but this means the odds of meaningful rate cuts in 2025 remain quite low.
The combination of a tight labour market, tax cuts and modestly high rates suggests a challenging outlook for highly leveraged firms, like most of the real estate sector. However, the economy remains supportive for lenders and those stocks exposed to the domestic
consumer.
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.
