Single Sector Fund
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This fund provides investors with concentrated exposure to New Zealand and Australian share markets from an actively managed investment portfolio of high conviction companies. The manager selects companies for investment where they have a strong view on the medium-term outlook for positive returns.
In times of high uncertainty or low conviction the fund can hold more cash than typical Australasian shares funds.
Risk Indicator (volatility)
Target Asset Allocation
This number indicates the relative 'risk' level of this fund based on the types of assets it is invested in, ranging from level 1 (least risky) to 7 (most risky).
| Risk category | Description of volatility |
| 1 | Very low |
| 2 | Low |
| 3 | Medium |
| 4 | Medium to High |
| 5 | High |
| 6 | Very high |
| 7 | Very high |
The risk indicators are calculated using returns of the funds, the returns of the fund’s market index or a combination of both, for the previous five years. Index returns or a mix are used if the fund has existed for less than five years. All Managers are required to use the same methodology so you can compare the risk of different funds if you are researching more than one manager.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 3.35% | -2.16% | 5.03% | 15.01% | 13.23% |
| Appropriate Market Index (AMI)2 | 2.55% | -1.73% | 0.20% | 14.77% | 14.66% |
AMI (appropriate market index) is a theoretical portfolio with similar underlying assets as the fund. This allows investors to see a comparison of how the value of those assets have changed in the market relative to the fund.
| Security Name | Percentage |
|---|---|
| Fisher & Paykel Healthcare | 11.38% |
| Infratil Limited | 9.46% |
| Spark New Zealand Ltd | 8.51% |
| Contact Energy Limited | 8.15% |
| Ingenia Communities Group | 7.43% |
| Summerset Group Holdings Ltd | 7.15% |
| Z Energy Ltd | 6.64% |
| Aristocrat Leisure Ltd | 6.38% |
| EBOS Group Limited | 6.29% |
| NEXTDEC Ltd | 5.35% |
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Commentary
As of 31 December 2021
Market Highlights
The strategy ended the quarter down in aggregate by 1.7%, in line with the broader NZ market that also fell 1.7%. The largest positive contributors to return were positions in EBOS Group (EBO), Z Energy (ZEL) and NEXTDC (NXT). EBO raised $779m to fund the acquisition of a medical device distribution business and also announced a strong trading update. EBO ended the quarter up 16.7%. ZEL rose 6.7% on the back of their Board endorsing a revised bid from Ampol. After falling in September, NXT added 6.3% over the quarter following confirmation of earnings guidance.
The largest negative contributors to return were positions in Pushpay (PPH), Westpac Bank (WBC) and Summerset (SUM). PPH dropped 28.7% after a disappointing result and downgrading its earnings guidance. In addition, concerns about unique customer additions and transaction volumes together with cost escalations remain to the forefront of investors’ minds. WBC fell 14.8% (in AUD) with their second half earnings announcement. The challenges include margin declines, cost increases and momentum into the new year, hence the sizeable fall in price. A number of retirement businesses reported earnings during the quarter which highlighted increasing costs, in particular for staff. This, along with some negative sentiment around the housing market outlook saw SUM fall 9.9%.
During the quarter we added to positions in Ingenia Communities (INA), Aristocrat Leisure (ALL) and EBO through their respective capital raisings. The fund’s position in Spark (SPK) was added to while reductions were made in ZEL and EROAD (ERD). The holding of Sydney Airport (SYD) was divested.