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Summer Australian Equities fund performance summary as at 31 March 2018.
Unit price (as at 31 March 2018): $1.1475
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
Further information can be found in the product disclosure statement.
See the Australian Equities page for the Summary of investment objective and strategy.
|Annualised total since inception||1 Month||3 Months||1 Year|
Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the highest Prescribed Investor Rate (28%).
|Asset name||% of fund net assets|
|Commonwealth Bank of Australia Limited||8.29%|
|BHP Billiton Limited||7.29%|
|Westpac Banking Corporation||6.88%|
|ANZ Cash Deposit||5.63%|
|Australia and New Zealand Banking Group Limited||3.97%|
|Rio Tinto Limited||3.67%|
|National Australia Bank Limited||3.63%|
|Macquarie Group Limited||3.61%|
|AGL Energy Limited||3.04%|
The top 10 investments make up 49.89% of the fund.
Summer Australian Equities reported losses of 4.76% for the month and 6.39% for the three months to March, but delivered a return of 0.54% for the year. It should be noted that the strength in the New Zealand dollar was the key reason for the quarterly loss, rising from approximately 0.91 cents in January to finish the quarter at over 0.94 cents against the Australian dollar.
The March quarter was a disappointing one for the Australian equity market. In New Zealand dollar terms the S&P/ASX 200 Accumulation Index declined by 7.05%. Although, the period was a difficult one, we believe that the decline reflects global dynamics. The February reporting season in Australia was perhaps the best in several years, in our view, and a large number of stock exposures held by the fund delivered sharply improved results including AGL Energy, Computershare, Lendlease and Qantas. Although Australian consumers remain conservative it was positive to note that the consumer staples sector also exceeded our expectations. The ongoing surge in capital expenditure was another theme evident in company earnings reports. According to our analysis, earnings in the first half of full year 2018 lifted by just over 6%.
The fund remains overweight in sectors and investment exposures with leverage to the global economy. For the first time since 2008, the world is experiencing synchronised growth. Led by the US, current momentum is forecast to extend into the second half of 2018. Accelerating earnings growth is also expected in Australia and we forecast company profits to grow by 8% this year. Nonetheless, as is usual, this overall figure disguises sharp differences between sectors. For example, companies with US earnings are growing substantially faster than those of domestically focused companies. Furthermore, although the banking sector offers value, sentiment remains neutral at best, a reflection of ongoing regulatory problems and lingering concern regarding the appropriateness of current capital levels. The fund retains banking exposures but the decision to do so reflects their attractive dividend flows rather than their near-terms growth prospects.
Looking ahead to the forthcoming quarter, the two-speed nature of the Australian equity market is expected to remain in place. As long as growth in the global economy remains intact, domestic focused companies are unlikely to outperform those with leverage to global dynamics. Consequently, the fund is likely to retain its current preference for exposure to companies with offshore earnings such as Bluescope Steel, BHP Billiton and RIO Tinto. Nonetheless, we expect that the current tension between interest rate sensitive stocks and growth exposures will remain in place over the forthcoming quarter, a theme that has lifted volatility levels. Therefore, we believe that a return to the more sanguine days of 2017 is unlikely. Finally, given the sharp increase in volatility amongst technology stocks it is fortunate that the Australian market is underexposed to the sector. “Tech” stock exposures are similarly under-represented in the fund.
For more information on the Summer Australian Equities fund, read the latest quarterly fund update.
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.