Summer New Zealand Equities
Summer New Zealand Equities fund performance summary as at 31 March 2024.
Fund at a glance
Unit price (as at 31 March 2024): $1.7146
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
For more information on the Summer New Zealand Equities fund, read the latest quarterly fund update and the product disclosure statement.
Fund objective and strategy
See the New Zealand 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% | 7.45% | 3.10% | 3.15% | 1.93% | 1.00% |
| 17.50% | 7.81% | 3.23% | 3.29% | 2.31% | 1.34% |
| 10.50% | 8.05% | 3.31% | 3.39% | 2.57% | 1.57% |
^ 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 57.31% of the fund.
Manager's Commentary
What happened in the markets that you invest in?
The retail sector stocks – Briscoes, The Warehouse and Kathmandu - reported their profits during March. Briscoes was the standout, holding on to improved margins achieved over the post Covid period. The Warehouse and Kathmandu performed significantly worse, suffering from both sales margin declines and cost increases. Much of this profit weakness was expected with share prices falling over preceding months. Both share prices, however, ended up strongly over the month, with The Warehouse supported by the announcement that they will close or sell the loss making “The Market” division.
There were positive updates from Fisher and Paykel Healthcare, Manawa Energy and Infratil, with each of the businesses seeing robust demand in their respective end markets. Ebos was the worst performer in the market index, falling over 7% on little company specific news.
How did your portfolio return
Summer New Zealand Equities delivered a return net of fees and before tax of 3.44% during March. For the 12 months to the end of March, the fund delivered a return net of fees and before tax of 2.96%.
The top contributors to relative performance were our overweight positions in Sky City Entertainment (SKC) and Channel Infrastructure (CHI). SKC received help from an announcement that online gaming will increasingly be regulated by the NZ Government, as they are well placed to meet the standards needed. CHI benefited from a continued recovery in demand for aviation fuel.
The biggest drags on performance were Comvita and Tower. There was no specific negative news flow for either company and we consider both well placed to deliver attractive returns from here.
What are we thinking about the future?
As we have noted for some time, we are amid a profit slump as the economy is barely growing (technically it is in a recession given positive net immigration) yet the RBNZ is not yet able to cut interest rates given inflation is still above their long-run target.
Companies facing reduced profits have been joined by the Government in cutting their expenses, including headcount, and we think demand weakness will persist and inflation will be forced lower as a result. We believe the NZ market valuation is now at a more attractive level, with the positives of interest rate cuts in sight and companies focused on improving profit margins to provide support for future returns. Further earnings falls are likely until at least the August reporting season, but interest rate cuts and an economic recovery should be in sight by then.
We have been gently adding to cyclical stocks such as Michael Hill, NZME (advertising) and the NZX (Equity and Debt market operator) even as they report softer profit numbers. All three appear to offer attractive medium-term returns, even if earnings are not yet recovering.
We continue to believe that most sectors of the market that offer defensive profit streams, like property, telecommunications and electricity generation, are fully priced. They will however benefit from expected falls in interest rates and hence we continue to keep our exposure to CHI, Contact Energy and Fonterra.
We stay underweight the most highly valued quality companies in the market, Fisher and Paykel Heathcare and Auckland airport, as we simply can’t get our valuations up to their share prices. We see more attractive opportunities elsewhere.
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.
