Summer Investment Selection

Summer Investment Selection fund performance update as at 31 August 2017. 

Fund at a glance

Unit price (as at 31 August 2017): $1.0766

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

Fund objective and strategy

See the Summer Investment Selection page for the Summary of investment objective and strategy.

Fund returns

 Total since inception1 Month3 Months6 Months
Fund 7.19% 2.41% 3.33% 5.72%

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%). 

Top 10 investments

  Asset name % of fund net assets
1 ANZ Cash Deposit 4.98%
2 Westpac Cash Deposit 2.66%
3 Precinct Properties New Zealand Limited 1.82%
4 Kiwi Property Group Limited 1.77%
5 Goodman Property Trust 1.66%
6 Bank of New Zealand Subordinated Note 17/12/2025 5.314% 1.65%
7 Rabobank Nederland Perpetual 08/10/2037 2.8825% 1.65%
8 Facebook Inc.- A 1.53%
9 New Zealand Local Government Funding Agency Ltd 15/12/2017 6.00% 1.49%
10 NIKE, Inc. 1.47%

The top 10 investments make up 20.68% of the fund.

 

Manager's comments

The Summer Investment Selection delivered a return of 2.41% for August.

During August, the global reporting season validated the recent strength of equity markets with earnings results for the second quarter (Q2) generally beating consensus expectations in both the Euro area and the United States (US). Q2 GDP growth in the US was revised higher (to 3.0% year-on-year), inflation-adjusted consumer spending continued to rise around the world, global manufacturing increased to a multi-year high, with solid increases in both developed and emerging economies and employment measures continued to improve. This positive growth picture is being delivered without the usual inflationary pressures. This is keeping the expectations for future interest rates hikes contained, which is underpinning the earnings yields on equity valuations. Low wage inflation is boosting company’s profits and increasing investment intentions as the business environment continues to recover.

For New Zealand investors, the New Zealand dollar (NZD) weakened during August against most major currencies, not necessarily because our economy looks to be weakening but because other economies are now gaining strength. In Australia, industrial commodity prices have been increasing sharply over the last 2-3 months as global demand picks up. This has boosted the Australian resources sector and contributed to a brighter outlook for the Australian economy. The Euro area continues to recover strongly with better than expected manufacturing, consumption and trade activity across most European Union economies. China’s growth remains above trend while the US economy has brushed aside the delayed Trump initiatives on tax and healthcare reform and infrastructure spending. The weaker NZD boosted returns from the exposure to international and Australian equities.

Whoever governs New Zealand after the election on 23rd September will inherit a relatively strong economy with fiscal surpluses forecasted to grow into substantial amounts over the next few years. Our terms of trade are at record highs signalling a strong global demand for our export products. National and Labour have similar fiscal and monetary objectives – reduce net government debt to 20% of GDP within 3-5 years, run fiscal surpluses over the business cycle and maintain government expenditure below 30% of GDP. The differences are more tribal in nature and affect the different priorities in revenue and expenditure preferences. In terms of risks, the current strength of the underlying economy suggests the main risks for investment strategy are global rather than domestic.

The fund’s positive contributions came from all asset classes with particularly strong contributions from international and Australian equities.

We expect global growth to remain firm over the next 12-months. Financial conditions are still relatively easy in most countries which should lead to stronger growth with a 6-9 month lag. This bodes well for activity over the rest of the year.

While we can’t rule out an existential risk such as an armed conflict in North Korea or elsewhere, our investment strategy is focussed on the underlying fundamentals of the business cycle which continue to improve and look positive.

 

 

For more information on the Summer Investment Selection 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.