Summer Australian Equities

Summer Australian Equities fund performance summary as at 31 January 2024. 

Fund at a glance

Unit price (as at 31 January 2024: $1.8163

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% 7.51% 1.56% 12.51% 5.85% 9.09%
17.50% 7.90% 1.57% 12.63% 6.36% 9.52%
10.50% 8.15% 1.58% 12.70% 6.70% 9.82%

    ^ 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

  Asset name % of fund net assets
1 BHP Group Limited 8.50%
2 CSL Limited 7.55%
3 Commonwealth Bank of Australia Limited 5.32%
4 Westpac Banking Corporation Ltd 4.23%
5 National Australia Bank Ltd 3.75%
6 Australia and New Zealand Banking Group Limited 3.41%
7 Macquarie Group Ltd 2.96%
8 Rio Tinto Ltd 2.77%
9 Santos Ltd 2.73%
10 Telstra Group 2.63%

The top 10 investments make up 43.85% of the fund.

Manager's Commentary

What happened in the markets that you invest in?

The Australian equity market grew around 1.2% in January as surprisingly strong US economic data saw markets re-assess the deep interest rate cuts which had been priced in throughout November and December. 

Geopolitical tensions in the Middle East continued to simmer, spilling into vital shipping links around the Red Sea. Shipping costs have surged, with many commercial vessels re-routing around Southern Africa, meaning voyages taking around 25% longer and incurring higher fuel costs to avoid attacks by Houthi rebels. 

In December local labour market data came in softer than expectations, with growing unemployment numbers suggesting there is some slack building in the labour market.       

The best performing sectors for the month were Energy (5.22%) and Financials (4.96%), both traditionally ‘value’ segments of the market which had underperformed in the final months of 2023. 

The worst performing sectors for the month were Materials (-4.80%) and Utilities (-1.50%). Mining stocks underperformed as investors contemplated less government stimulus for the Chinese property market, driving iron ore prices lower in January. The Utilities sector was dragged lower by investor rotation out of defensive sectors and weakness in sector heavyweight AGL Energy.  

How did your portfolio perform?

Summer Australian Equities delivered a return net of fees and before tax of 1.59% during January. For the 12 months to 31 January the fund delivered a return net of fees and before tax of 7.21%. 

 Key positive contributors for the month were our underweight positions in mining stocks, BHP Group and Newmont Corporation. BHP underperformed after a softer set of production data for the December quarter and falling iron ore prices. Gold miner Newmont was weaker with investors positioning for its potential exit at the end of March from the ASX20, a widely followed benchmark. 

Key negative contributions came from underweight position in Commonwealth Bank of Australia, and our overweight position in IGO. Commonwealth Bank has continued to rally without any real change in fundamentals, though we note its large index position does see it benefit from passive buying and the ongoing share buyback may provide support. IGO traded lower on productions cuts and fears of oversupply in global lithium markets. 

We actively manage the fund’s foreign currency exposures. As at 31 January 2024, these exposures represented 97.65% of the value of the fund. After allowing for foreign currency hedges in place, 62.41% of the value of the fund was unhedged and exposed to foreign currency risk.

What are we thinking about the future?

We continue to monitor closely the situation in the Middle East. A broadening of this conflict could destabilise the region, putting supply side pressure on energy markets, in addition to the rising shipping costs we’ve seen to date. We have selectively added to our positions in Utilities stocks, which should benefit if things escalate in the region.  

Chinese policy makers have so far shown little willingness to provide wholesale support for the ailing Chinese property market, instead taking a more incremental approach to support the sector. The implication is less demand for the iron ore produced by listed miners.  

Despite the recent falls in iron ore prices, these miners are likely to produce earnings above market estimates as analysts have adopted conservative commodity price assumptions in their forecasts. Given stock price weakness and stronger earnings momentum, we have added to our mining sector holdings through January. 

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.