Single Sector Fund

Nikko AM Global Shares Fund

About the fund

This fund invests in a selection of companies from around the world, covering a diverse range of regions and sectors where the manager believes there is potential for quality and future value.

Risk Indicator (volatility)

Target Asset Allocation

Equities 100.00%

Commentary

As of 31 December 2021

Market Highlights

  • Equities benefitted from a reasonably supportive corporate earnings season at the start of the quarter then, as the quarter wore on, inflationary pressure built, and equities were seen as offering better real returns than bonds.
  • Information Technology was the best performing sector over the course of the quarter.
  • The combination of Omicron variant of COVID-19 and flattening yield curves saw traditional value sectors cede market leadership, with both Energy and Financials failing to build much on gains made earlier in the year. Both sectors underperformed over the quarter.



 

The strategy returned 7.09% for the quarter, 0.40% behind the benchmark. Positive contributors to fund performance over the quarter were Accenture, Schneider, Carlisle and Microsoft. Accenture outperformed after releasing stronger than expected fiscal Q1 earnings and delivering an upbeat outlook for 2022. On Schneider and Carlisle – both benefitted from positive sentiment towards construction spending going into 2022 and management teams at both companies have been putting forward very confident messages about how they see their mid-term growth opportunities in recent months. In both cases, demand for their products is underpinned by the need to make commercial buildings more energy efficient. Spending on these measures would have been given a boost by the US ‘Build Back Better’ infrastructure plans. Microsoft outperformed this quarter on the back of extremely strong quarterly results. Azure, Microsoft’s cloud solution, grew 50% YOY, exceeding guidance, and is now 21% of total revenue. Main detractors were Palomar, HelloFresh and LHC Group. Palomar was weak over the period with no stock specific news driving the weakness. Recent weeks have seen some underperformance from small and mid-cap stocks with investors preferring the relative liquidity of large cap stocks as the Federal Reserve begins to tighten monetary policy. HelloFresh fell after guiding to weaker than expected profit margins in 2022 as the company continue to invest heavily in expanding their competitive advantage. LHC Group underperformed over the period. News of the discovery of a new COVID-19 variant threatened potential future disruption to US nurse availability when that variant arrives in the US and if vaccination / natural immunity has not improved before it does.

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 1.61% 5.39% 21.42% 23.99%
Appropriate Market Index (AMI)2 3.10% 7.49% 24.66% 19.55%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: MSCI ACWI, with net dividends reinvested unhedged in NZD.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Microsoft Corp USD0.00005 6.97%
Accenture Plc 4.08%
Carlisle Cos Inc 3.78%
Amazon Com Inc 3.68%
Abbott Labs 3.34%
Sony Corp Y50 3.30%
Taiwan Semicon Manufacturing Co Ltd 3.21%
Adobe Inc Com USD0.0001 3.10%
Compass Group Ord GBP0 1105 3.05%
Emerson Electric Co 2.85%

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