Summer New Zealand Equities

Summer New Zealand Equities fund performance summary as at 31 January 2024.

Fund at a glance

Unit price (as at 31 January 2024): $1.6772

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% 7.31% 0.97% 8.12% -1.21% -0.85%
17.50% 7.66% 0.97% 8.14% -0.84% -0.54%
10.50% 7.89% 0.96% 8.15% -0.59% -0.33%

 ^ 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 Fisher & Paykel Healthcare Corporation Limited 8.65%
2 Spark New Zealand Limited 7.06%
3 Auckland International Airport Limited 6.57%
4 Infratil Limited 6.40%
5 Contact Energy Limited 6.24%
6 Meridian Energy Limited 5.09%
7 SKYCITY Entertainment Group Limited 4.71%
8 Mainfreight Limited 4.51%
9 The a2 Milk Company Limited 4.42%
10 Ebos Group Limited 3.72%

The top 10 investments make up 57.38% of the fund.

Manager's Commentary

What happened in the markets that you invest in?

The New Zealand Equity market rose 0.87% during January. Leading the market higher were A2 Milk and Summerset, both posting positive performance after updates on the strength of their end markets. Aged care unit sales in the case of Summerset, and the Chinese birth rate in the case of A2 Milk.  

The month before reporting season is sometimes called confession season. Under continuous disclosure rules, most material information needs to be released to the market in real time, and companies review their management accounts to end of December and decide whether a market update is required prior to reporting their audited accounts. It is called confession season as downgrades to expectations tend to outweigh upgrades. Michael Hill and Comvita both joined that group since we last reported to you. Against that, Summerset and Restaurant Brands confirmed current trading in-line with expectations. 

On the economic front, the RBNZ maintained its view that inflation is falling only slowly, and interest rate cuts are more likely in the second half of the year than the first. The housing market recovery stalled, but business confidence improved. Disputes in Israel spilled over to the Red Sea and could yet lead to higher shipping costs (and inflation) if this situation deteriorates further. 

How did your portfolio return

Summer New Zealand Equities delivered a return net of fees and before tax of 0.96% during January. For the 12 months to 31 January, the fund delivered a return net of fees and before tax of -0.22%. 

Top contributors to relative performance were Auckland Airport and A2 Milk. Auckland Airport gave up some of last month's gains as interest rates rose, helping our underweight position, whilst signs of stabilisation in the birthrate for the important Chinese market saw a 12% gain for A2 Milk for the month.  

The biggest drags to performance were Michael Hill, on the back of an earnings downgrade due to weak Christmas trading, and Synlait Milk as it continues to look at ways to reduce its debt levels. 

What are we thinking about the future?

Whilst interest rate cuts by the Reserve Bank of NZ are not expected until later in the year, longer dated mortgage rates have started to decline and business confidence surveys have shown the first signs of improvement. With full employment and strong migration, reported sales are holding up, but costs have been rising faster, including interest costs, reducing margins and profitability for many companies at present. Lower inflation will help both of those headwinds abate. 

Your Summer New Zealand Equities continues to favour Fonterra and Channel Infrastructure over other stocks with stable earnings as they offer more attractive valuations. We maintain large underweight positions in expensive growth stocks, such as Fisher and Paykel Healthcare (FPH) and Auckland Airport (AIA). We continue to believe attractive returns are achievable in the likes of Sky City, Sky TV and Tower Insurance as they continue to resolve company specific issues affecting near-term earnings. 

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.