Managed Funds: Single Sector Fund

Nikko AM SRI Equity Fund

About the fund

This fund invests in a broad selection of NZ listed companies with potential for growth of income and capital, and may also invest in some Australian shares if the portfolio managers see opportunities, as part of an actively managed portfolio. 

This fund provides a combination of specific exclusions and Environmental Social and Governance (ESG) integration, which considers the sustainability of companies. 

The fund deliberately avoids investing in certain companies, industries, and sectors and aims to align social and personal values while still providing competitive returns.

Managed by a dedicated, institutional calibre SRI portfolio manager, the Nikko AM NZ SRI Equity Fund comprises 30-35 New Zealand and Australian companies. 

Find our more about the Nikko AM SRI Equity Fund and our approach to Responsible Investing

Annual Fee    0.95%

Risk Indicator (volatility)

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5 High
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7

Target Asset Allocation

Growth 100.00%

Find out more about the Nikko AM SRI Equity Fund from Michael De Cesare

Michael is a Portfolio Manager here at Nikko AM. In this video, Michael talks about the difference between ESG and SRI and outlines what the SRI Equity Fund is trying to achieve. Michael also outlines what the Fund's portfolio consists of and describes why you should consider this fund for your next investment.

Commentary

As of 31 December 2023

Market Highlights

  • Global equity markets were weak in October before staging a strong recovery over November and December as bond yields fell sharply.
  • The United States S&P 500 index rose 11.2%, the Japanese Nikkei 225 added 5.0%, the UK FTSE 100 index gained 1.7%, the Australian ASX 200 index increased 8.4% and the MSCI World index ended the quarter up 9.4% (in local terms).
  • The S&P/NZX 50 index ended the quarter up 4.3%.

 

The largest positive contributors to the fund’s relative return were underweight positions (nil holdings) in Heartland Group (HGH), Air New Zealand (AIR) and Port of Tauranga (POT). HGH, AIR and POT all announced updates to the market that were disappointing. HGH fell 16.9% after downgrading earnings guidance after a slower than expected start to their financial year. AIR noted softness in domestic travel including corporate and government along with domestic and trans-Tasman leisure travel. AIR ended the quarter down 13.0%. POT fell 4.8% after providing a trading update at its annual shareholder meeting, with earnings guidance below market expectations.

The largest negative contributors to relative return were from overweight positions in Allkem (AKE), Infratil (IFT) and Contact (CEN). The merger of AKE and Livent was approved which saw AKE cease trading late in December and start trading under its new name, Arcadium Lithium. AKE fell in October and November on weak lithium markets before recovering in December as markets steadied and the merger was approved. AKE ended the quarter down 4.7%. CEN announced a delay to the commissioning of their material greenfield geothermal plant Tauhara, leading to negative earnings revisions for FY24. CEN end the quarter down 0.4%. IFT delivered their first half FY24 result, demonstrating robust operating performance across their portfolio companies and lifted their mid-point EBITDA guidance for FY24. The updated Longroad independent valuation did not appreciate as meaningfully as some expected due to an increase in discount rates. IFT fell 0.9% over the quarter.

Key portfolio changes during the quarter included the divestment of CHC. Adding to positions in Ingenia (INA), RYM, NextDC (NXT) and Summerset (SUM). Reducing positions in Restaurant Brands (RBD), Freightways (FRE) and Fletcher Building (FBU). (Bold denotes stocks held in the portfolio).

Performance

Nikko AM Investment Scheme
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Performance

at 31 December 2023
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 4.24% 4.02% 4.22%
Appropriate Market Index (AMI)2 3.96% 4.30% 3.51%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: S&P/NZX 50 Index Gross with Imputation Credits.

Cumulative Returns Since Inception, $10,000 invested

Top 10 Holdings

Security Name Percentage
Fisher & Paykel Healthcare 11.15%
Infratil Limited 10.29%
Spark New Zealand Ltd 10.19%
Auckland International Airport Ltd 9.52%
Contact Energy Limited 7.86%
Meridian Energy Ltd NPV 5.28%
Mainfreight Limited 4.70%
EBOS Group Limited 4.54%
Ryman Healthcare Ltd 4.53%
Summerset Group Holdings Ltd 4.12%
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