Managed Funds: Single Sector Fund

Nikko AM Core 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.

Morningstar Bronze Rating Report 

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Download Morningstar's managed investment report on the Nikko AM Core Equity Fund

Risk Indicator (volatility)

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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 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 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 of 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 and earnings guidance below market expectations. The largest negative contributors to relative return were from overweight positions in Allkem (AKE), Ryman Healthcare (RYM) and Infratil (IFT). 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%. RYM made a small reduction to the bottom of its earnings guidance but pleasingly there was better disclosure. Some investors, most likely retail, would have been disappointed by the announcement that there would be no dividend for at least the next two years. RYM ended the quarter down 6.5%. 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. Key portfolio changes during the quarter included adding to our position in Contact Energy (CEN), RYM, Summerset (SUM), Spark (SPK) and Channel Infrastructure (CHI). Positions in A2 Milk (ATM), Mainfreight (MFT), EBOS (EBO), Meridian (MEL), Restaurant Brands (RBD), Aristocrat Leisure (ALL), and Fletcher Building were reduced. The fund’s holding in CHC was divested.

(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 4.06% 3.89% 4.25% -1.75% 6.47%
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: 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 11.61%
Infratil Limited 10.24%
Spark New Zealand Ltd 10.24%
Auckland International Airport Ltd 9.23%
Contact Energy Limited 7.72%
Meridian Energy Ltd NPV 5.27%
Mainfreight Limited 4.82%
Ryman Healthcare Ltd 4.51%
EBOS Group Limited 4.38%
Summerset Group Holdings Ltd 3.76%
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