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.

Risk Indicator (volatility)

Target Asset Allocation

Equities 100.00%

Commentary

As of 31 December 2021

Market Highlights

  • Global equity markets mostly posted strong returns for the quarter while Inflation continues to be relatively high in a number of economies. There is a focus on what response Central Banks will take given the high inflation numbers.
  • The United States S&P 500 index rose 10.7%, the Japanese Nikkei 225 index lost 2.2%, the UK FTSE 100 index increased 4.2%, the Australian ASX 200 index added 2.1% and the MSCI World index ended the quarter up 7.0%.
  • The S&P/NZX 50 index ended the quarter down 1.7%.



The strategy ended the quarter down 0.8%, 0.9% ahead of the index return. The largest positive contributors to relative return were overweight positions in EBOS (EBO) and Sky Network Television (SKT) and an underweight position in Ryman Healthcare (RYM). 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%. SKT jumped 37.8% after upgrading earnings guidance and announcing the sale of its property in Mt Wellington. RYM’s result was a little disappointing with COVID-19 impacting on unit delivery and cost inflation also impacting on the result. RYM ended the quarter down 18.3%.

The largest negative contributors to relative return were overweight positions in Summerset (SUM) and Pushpay (PPH) and a zero holding in Goodman Property (GMT). 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%. PPH dropped 28.7% after a disappointing result and downgrading its earnings guidance while GMT rose 7.3% as industrial property continues to see good revaluation gains.

Key portfolio changes during the quarter included adding Vulcan Steel (VSL), Arvida (ARV) and Serko (SKO) through their capital raisings to the portfolio. Positions in New Zealand Refining (NZR), Ingenia Communities (INA), Aristocrat Leisure (ALL) and EBO were added to through their respective capital raisings. Positions in PPH, Restaurant Brands (RBD), Pacific Edge (PEB), Spark (SPK), Fletcher Building (FBU) and RYM were increased. Positions in Z Energy (ZEL), Meridian Energy (MEL), Centuria Industrial REIT (CIP), Scales (SCL) and Sky City Entertainment (SKC) were reduced. Sydney Airport was exited completely.

 

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 3.34% -1.02% 2.26% 13.84% 14.17%
Appropriate Market Index (AMI)2 2.55% -1.73% 0.20% 14.77% 14.66%
  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 13.94%
Mainfreight Limited 7.29%
Spark New Zealand Ltd 7.11%
Infratil Limited 6.60%
Contact Energy Limited 6.33%
Fletcher Building Ltd 5.94%
EBOS Group Limited 5.67%
Auckland International Airport Ltd 5.66%
Summerset Group Holdings Ltd 5.18%
Meridian Energy Ltd NPV 4.13%

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