Single Sector Fund

Nikko AM Balanced Fund

About the fund

This fund aims for a steady investment return over the medium to longer term without too many ups and downs. The fund does this by investing across a range asset classes with  exposure to shares for growth complemented by exposure to bonds and alternatives to reduce volatility.

Risk Indicator (volatility)

Target Asset Allocation

Equities 55.00%
Bonds 30.00%
Other 15.00%

Commentary

As of 31 December 2021

Market Highlights

  • 2021 proved to be a year of divergent performance, some large movements in several areas of the financial markets and a number of unexpected events; however, the year did finish on a positive note for investors with equity, property and bond markets moving higher over the month of December.
  • The NZ dollar generally trended lower over the year meaning that investors with foreign currency assets benefitted (in NZ dollar terms) from their offshore exposure, but this modestly pulled back in December with the NZ dollar rising slightly against a basket of currencies. 



 

The strategy underperformed its benchmark for the quarter, but outperformed its benchmark over the month, with most sectors delivering returns above their respective market indices.  Particularly strong were our NZ equity funds with the Core Fund being 0.9% ahead for the month and 3% ahead for the year.  Global shares also performed well ahead of the benchmark but struggled to keep pace with the growth of the market over the full year.  The Option Fund returned a very strong 4% for the month of December, but our other non-traditional investment sectors fared less well - with the Multi-strategy Fund being slightly negative but more significantly the ARK strategy, which fell nearly 11%, offsetting some of the gains elsewhere in the fund.  Overall, December completed an acceptable year for the fund with returns being broadly in line with our long-term expectations. We do not expect the levels of divergence between the NZ and global markets to continue at the levels observed during 2021, but there are a number of factors which will likely lead to ongoing volatility in markets.  Most obviously the way that different central banks and economies face and deal with higher inflation will play a role, as will the ongoing pandemic saga.  Along with heightened geo-political tensions in eastern Europe and the South China Sea, it’s possible to argue for a wide range of investment outcomes in 2022.  The fund will approach this environment focused on its core strategy and will be managed with a medium to long term perspective being diversified both across and within sectors to help dampen volatility whilst achieving its investment objective.

Performance

Nikko AM Investment Scheme
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Performance

at 31 December 2021
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 1.44% 0.81% 4.29% 10.50%
Appropriate Market Index (AMI)2 1.98% 2.18% 6.97% 11.86%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: Composite - refer to Nikko AM NZ Investment Scheme OMI.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
JPM Multi Manager Alternatives X Acc NZD Hedged 9.68%
Fisher & Paykel Healthcare 2.78%
Microsoft Corp USD0.00005 1.92%
Infratil Limited 1.65%
Spark New Zealand Ltd 1.64%
Contact Energy Limited 1.51%
Summerset Group Holdings Ltd 1.39%
Outstanding Settlement Receipts - EUR 1.33%
EBOS Group Limited 1.27%
Japan Government 110422 0.0 Gb 1.14%

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