Managed Funds: Single Sector Fund

Nikko AM Core Equity Fund

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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.

Morningstar Bronze Rating Report 

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Risk Indicator (volatility)

1
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5 High
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7

Target Asset Allocation

Growth 100.00%

Find out more about the Core Fund from Michael Sherrock

Michael Sherrock is Head of Equities and Portfolio Manager 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. Michael also talks us through the investment process and details the main reasons why you should consider the Core Fund for your next investment.

Commentary

As of 31 May 2025

Market Overview

  • Global equity markets delivered strong returns over the month as certain US tariffs were paused, countries and companies continued to assess the impacts of the tariffs along with earnings results announcements for the period ending March.
  • The United States S&P 500 index rose 6.2%, the Japanese Nikkei 225 increased 5.3%, the UK FTSE 100 index added 3.3%, the Australian ASX 200 index gained 4.2% and the MSCI World index ended the month up 5.6% (in local terms).
  • The S&P/NZX 50 index ended the month up 4.3%.

Fund Commentary

The largest positive contributors to the fund’s relative return were overweight positions in Mainfreight (MFT), Channel Infrastructure (CHI) and Sky Network Television (SKT). Following a weak start to the year, down 24.5% to the end of April, MFT bounced back in May, up 26.6% over the month. The weakness in MFT’s share price had been driven by investors’ concerns around the impact tariffs would have on its business. MFT’s earnings result was better than the markets expectation and helped drive the share price up in May. At its Annual Shareholder Meeting CHI announced they were increasing their payout ratio going forward which will see increased dividends to shareholders. This increased dividend outlook resulted in CHI increasing by 12.1% over the month. On no specific news, SKT rose 8.9% over the period.

 

The largest negative contributors to relative return were from overweight positions in Ryman Healthcare (RYM), Sky City Entertainment (SKC) and Serko (SKO). Following its $1b capital raise in February, RYM’s share price continues to struggle. Investors were hopeful that RYM would provide a positive update on unit sales in its earnings result, unfortunately that wasn’t delivered, further, a larger-than-expected asset devaluation was delivered. This saw RYM deliver a -5.0% return over the month. While not reporting a result during the month, SKC announced a downgrade to its earnings guidance as it continues to be impacted by the weak NZ economy and increased compliance costs. SKC fell 17.4% over the month. While SKO reiterated its medium-term revenue aspiration of $250m by 2030, its earnings result for this period disappointed along with its guidance for the next financial year. This resulted in SKO falling 16.7% in May.

 

Key portfolio changes during the month included adding to our positions in Aristocrat Leisure (ALL), EBOS (EBO), Kiwi Property (KPG), and Spark (SPK). Positions in ResMed (RMD), Contact Energy (CEN), Ingenia Communities (INA) and Waypoint REIT (WPR) were reduced. The funds holding in Heartland Bank (HGH) was divested.   (Bold denotes stocks held in the portfolio). 

Performance

Nikko AM Investment Scheme
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Performance

at 31 May 2025
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 3.90% -2.39% 2.74% 3.50% 3.55%
Appropriate Market Index (AMI)2 4.34% -1.24% 5.43% 4.01% 3.45%
  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.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Fisher & Paykel Healthcare 17.16%
Infratil Limited 9.77%
Auckland International Airport Ltd 9.32%
Contact Energy Limited 7.26%
Meridian Energy Ltd NPV 6.27%
Mainfreight Limited 5.23%
EBOS Group Limited 4.94%
The A2 Milk Company Limited 4.80%
Spark New Zealand Ltd 4.68%
Summerset Group Holdings Ltd 3.91%
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