Single Sector Fund

Nikko AM Concentrated Equity Fund

About the fund

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)

1
2
3
4
5 High
6
7

Target Asset Allocation

Growth 100.00%

Find out more about the Concentrated Fund from Stuart Williams

Stuart is the former Head of Equities and current Managing Director at Nikko AM. In this video, he explains what an average day in his job looks like, what he's trying to achieve with this portfolio, and what he sees as a good investment. Stuart also talks us through the investment process and outlines the main reasons why you should consider the Concentrated 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 were positions in Fisher & Paykel Healthcare (FPH), Spark (SPK) and NextDC (NXT). FPH’s result was a touch better than expected by the market and full year guidance also gave comfort that earnings were not going to disappoint for the full year result. FPH ended the quarter up 10.5%. At its annual shareholder meeting SPK reaffirmed its earnings guidance and rose 7.7% over the quarter. NXT gained on the back of lower bond yields and the continued focus from investors in data storage and artificial intelligence beneficiaries. NXT rose 10.8% (in AUD).

The largest negative contributors to the fund’s return were from positions in Allkem (AKE), Infratil (IFT) and Sky City Entertainment (SKC). 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%. 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 lift as meaningfully as some expected due to an increase in discount rates. IFT fell 0.9% over the quarter. SKC fell 5.7% after announcing a reduction in its earnings guidance.

Portfolio changes over the quarter included adding to its positions in Summerset (SUM), Mainfreight (MFT) and Contact Energy (CEN) while reducing positions in A2 Milk (ATM), FPH, Aristocrat Leisure (ALL), IFT and SPK.

(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 4.56% 3.87% 7.31% -1.25% 6.88%
Appropriate Market Index (AMI)2 3.96% 4.30% 3.51% -2.72% 6.79%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: SS&P/NZX 50 Index Gross with Imputation Credits.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Contact Energy Limited 12.40%
Infratil Limited 12.32%
Spark New Zealand Ltd 10.98%
NEXTDEC Ltd 10.39%
Fisher & Paykel Healthcare 9.66%
Summerset Group Holdings Ltd 7.55%
Aristocrat Leisure Ltd 6.33%
Mainfreight Limited 5.75%
Ingenia Communities Group 5.26%
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