Global Equities Fund

(Formerly Forsyth Barr Global Equities Fund)

Overview

The fund aims to achieve positive long-term returns by investing in selected international shares which will typically have high levels of movement up and down in value.

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Unit Price

Month End Unit Price

As at 30 Apr 2022

1.4246 NZD

The unit prices shown do not take into account any adjustment for any accrued PIE tax that individual investors may need to pay on withdrawal. Buy/sell spreads may apply when transacting - there are currently none.

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Manager's Comment

Market Commentary

April saw a continuation of themes from the March quarter. Inflation repeatedly surprised to the upside and saw central banks rapidly move towards raising short term interest rates. The Ukrainian crisis has yet to be resolved, creating further risks to economic growth and supply chains globally. Whilst many markets began removing restrictions related to the Covid-19 pandemic, China has begun to impose tighter restrictions as Omicron takes hold there, creating further disruption.

Against this market backdrop, global equities markets delivered significant negative returns. The worst affected stocks were some of the major beneficiaries of the pandemic lockdowns, as demand for…

Market Commentary

April saw a continuation of themes from the March quarter. Inflation repeatedly surprised to the upside and saw central banks rapidly move towards raising short term interest rates. The Ukrainian crisis has yet to be resolved, creating further risks to economic growth and supply chains globally. Whilst many markets began removing restrictions related to the Covid-19 pandemic, China has begun to impose tighter restrictions as Omicron takes hold there, creating further disruption.

Against this market backdrop, global equities markets delivered significant negative returns. The worst affected stocks were some of the major beneficiaries of the pandemic lockdowns, as demand for their products now returns to prior trends.

Portfolio Performance

The Global Equities Fund delivered a gross return of -7.11% during April, underperforming the fund’s market index return of -3.90%.

For the 12 months to the end of April 2022 the Global Equities Fund delivered a gross return of -15.17%, underperforming the fund’s market index return of +1.53%

Share price falls in our holdings of Netflix, Amazon, Pay Pal, Walt Disney, Salesforce and Alphabet drove our relative under-performance.

Outlook

Europe and Asia appear to be the worst effected from an economic growth perspective. Some economists debate the usefulness of higher interest rates when it is supply, rather than demand, that is the root of rising prices. It is clear however that rising prices are everywhere, wages are beginning to respond, and surveys of expected future inflation are drifting higher, forcing the central banks to respond.

Whilst consumer and technology stocks have been some of the worst performing stocks on the above economic growth concerns, we continue to believe many of these companies remain positively exposed to a post vaccination economic reopening, and have attractive long term fundamentals. The price falls only make companies exposed to this theme, such as Amazon, Comcast, Fiserv, Nike, Ryanair, Uber Technologies, Visa and Walt Disney more attractive, in our opinion.

Other key investment themes across our portfolio include: stocks with pricing power – denoted by strong brands and industry structures - to help combat near term inflation; digitalisation through the Fintech sector disrupting the incumbent financials; energy transition to reduce Co2 emissions; and connected healthcare - using data analytics to improve health outcomes.

The funding of our two new global equity managers to create a multi manager product (combined with our current portfolio) will begin in May. We look forward to being fully invested with them over the next four to six weeks.

We actively manage the fund’s foreign currency exposures. As at 31 April 2022, the fund’s foreign currency exposures represented 97.47% of the value of the fund. After allowing for foreign currency hedges in place, approximately 46.24% of the value of the fund was unhedged and exposed to foreign currency risk.

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Major Investments

As at 30 Apr 2022
Company name % of fund
Takeda Pharmaceutical Co Limited 5.48%
Visa Inc.- Class A Shares 5.40%
Siemens AG-Reg 5.13%
Microsoft Corporation 5.09%
Amazon.com, Inc. 4.69%
Holcim AG 4.03%
Apple Inc. 4.02%
Tencent Holdings Limited 3.92%
Fiserv Inc 3.85%
Alibaba Group Holding-Sp Adr 3.77%
Major holdings as % of total portfolio 45.38%
Total portfolio holdings 41

Performance over time

Return Comparison

As at 30 Apr 2022
1 Month 3 Months 1 Year *3 Years *Since commenced operation
Net Fund Return 1 Month -6.60% 3 Months -16.11% 1 Year -16.42% *3 Years 0.98% *Since commenced operation 2.07%
Gross Fund Return 1 Month -7.11% 3 Months -15.61% 1 Year -15.17% *3 Years 3.27% *Since commenced operation 3.81%
MSCI ACWI Net TR Index (0% hedged to the NZD) 1 Month -1.41% 3 Months -7.35% 1 Year 4.52% *3 Years 10.40% *Since commenced operation 7.79%
MSCI ACWI Net TR Index (50% hedged to the NZD) 1 Month -3.90% 3 Months -6.89% 1 Year 1.53% *3 Years 10.52% *Since commenced operation 8.94%
MSCI ACWI Net TR Index (100% hedged to the NZD) 1 Month -6.38% 3 Months -6.53% 1 Year -1.65% *3 Years 10.38% *Since commenced operation 9.75%

*Annualised
Net Fund Returns are calculated after deduction of fund charges, trading expenses and accrued tax for a New Zealand resident paying individual tax at the highest Prescribed Investor Rate (28%). Gross Fund Returns are calculated before deduction of taxes and fund charges but after deduction of trading expenses and including imputation credits where applicable. Market index returns do not have any deductions for fund charges, trading expenses or tax.

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Morningstar Performance

Morningstar is a leading global provider of independent investment research that ranks and reports on Funds within New Zealand and Australia. View the latest Fund Report for the Global Equities Fund.

Fund update

As at 31 March 2022

This document tells you how the Global Equities Fund has performed and what fees were charged. The document will help you to compare the fund with other funds. (Please note that this fund was previously known as the Forsyth Barr Global Equities Fund, and that Fund Updates may refer to the fund by that name.)
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General Fund Information

Risk indicator

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The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the relevant fund’s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way. The risk indicator is based on the returns data for the five years to 31 March 2022. See more information about the risks of investing in the Product Disclosure Statement.

Target investment mix

Cash and cash equivalents 10%
New Zealand fixed interest 0%
International fixed interest 0%
Australasian equities 0%
International equities 90%
Listed property 0%

Things to note

  • Manager: Forsyth Barr Investment Management Limited
  • Investment manager: Octagon Asset Management Limited
  • Date the fund started: 26 June 2008
  • Tax status: Portfolio Investment Fund (PIE)
  • Minimum suggested investment time frame: At least five years
  • Benchmark: None
  • Currency: New Zealand dollars

View the Product Disclosure Statement for detailed information about this Fund and Octagon Investment Funds Scheme.

Fees

  • Annual fund charges are currently 1.35% p.a. of the value of your investment. We pay management and administration charges along with the Supervisor fee out of this. All fees and charges are quoted exclusive of GST.
Forsyth Barr Investment Management Limited is the issuer and Octagon Asset Management Limited the investment manager of the Octagon Investment Funds. The comments on this webpage do not take your personal circumstances into account. Before acting on any information on this webpage, we recommend you seek financial advice. Forsyth Barr Investment Management Limited, Octagon Asset Management Limited and their affiliates do not make any representation or warranty (express or implied) that this webpage is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this webpage. This webpage is not intended to be distributed or made available to any person in any jurisdiction where doing so would constitute a breach of any applicable laws or regulations.
 
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