New Zealand Equities Fund

(Formerly Forsyth Barr New Zealand Equities Fund)

Overview

The fund aims to achieve positive long-term returns by investing mostly in selected New Zealand shares, and in Australian listed shares, where the company has meaningful operations in New Zealand, which will typically have high levels of movement up and down in value.

Divider

Unit Price

Month End Unit Price

As at 30 Apr 2022

4.0012 NZD

The unit prices shown do not take into account any adjustment for PIE tax.
Buy/sell spreads may apply when transacting. There are currently none.

Divider

Manager's Comment

Market Commentary

The New Zealand equity market delivered another soft month of returns in April. Whilst stock specific news was thin on the ground, continued troubles in Ukraine, very strong consumer price inflation and the resulting move higher in long term interest rates were all headwinds. The New Zealand economy remains robust, and we expect companies are currently earning good profits. However, the equity market is forward looking, and weak consumer surveys on the back of cost of living increases and higher mortgage rates has seen the market price in a weaker outlook over the next 12 months.

Some travel and leisure…

Market Commentary

The New Zealand equity market delivered another soft month of returns in April. Whilst stock specific news was thin on the ground, continued troubles in Ukraine, very strong consumer price inflation and the resulting move higher in long term interest rates were all headwinds. The New Zealand economy remains robust, and we expect companies are currently earning good profits. However, the equity market is forward looking, and weak consumer surveys on the back of cost of living increases and higher mortgage rates has seen the market price in a weaker outlook over the next 12 months.

Some travel and leisure restrictions were eased over April which will see a further shift from spending on goods to spending on services, like travel and dining out. We find both of the direct exposures to travel, Air New Zealand and Auckland Airport, very expensive, and hence are looking at other companies, such as Kathmandu, to gain exposure.

Pushpay was the best performing stock in the market index over the month on the back of announcing it has received several expressions of interest from investors wishing to acquire the company. Close behind was Air New Zealand as it has finally raised new capital to put it on a more stable footing – assisted by the gradual relaxation of travel rules. At the other end of the market index was Eroad, which suffered under the sudden resignation of its Chief Executive Officer, who is also the founder of the company. 

Portfolio Performance

The New Zealand Equities Fund delivered a gross return of -1.22% over the month of April, outperforming the fund's market index return of -1.86%. 

For the 12 months to the end of April the New Zealand Equities Fund delivered a gross return of 1.22% outperforming the fund’s market index return of -5.98%.

Whilst the fund was overweight, the best performing stock Pushpay was underweight the next best performing in Air New Zealand which more than offset that gain. Strong relative (to the market index) performance came from underweight positions in F&P Healthcare and A2 Milk, assisted by an overweight in Channel Infrastructure (formerly Refining NZ). Against this, our relative positions in Sky TV, Port of Tauranga and Fonterra hurt relative performance.

Outlook

We think risks to the economy and company earnings are building. The strong employment backdrop is the last powerful driver of the economy that has not started to weaken. Despite the very strong employment position, consumer confidence, as measured by surveys, is at a very low level.

The gradual fall in the market over the past 18 months has removed some of the valuation headwind we saw, but risks remain if companies start downgrading their earnings expectations. In our view, most company valuations are not yet “cheap”, but we are starting to find opportunities to increase our weightings in quality companies which we previously viewed as too expensive.

We continue to be patient with our exposures to border re-openings primarily Sky City and Kathmandu. We did not participate in either the Air New Zealand or Vital Healthcare equity raises, as we feel their prices are still not offering value. We have increased our weightings in F&P Healthcare and A2 Milk as their share price falls have made them more attractive.

Read more

Major Investments

As at 30 Apr 2022
Company name % of fund
Fisher & Paykel Healthcare Corporation Limited 9.04%
Spark New Zealand Limited 8.06%
Contact Energy Limited 6.23%
Ebos Group Limited 5.89%
Fletcher Building Limited 5.10%
Auckland International Airport Limited 4.89%
SKYCITY Entertainment Group Limited 4.58%
Infratil Limited 4.39%
Mainfreight Limited 4.34%
Meridian Energy Limited 3.95%
Major holdings as % of total portfolio 56.47%
Total portfolio holdings 51

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 -1.29% 3 Months 1.49% 1 Year -0.66% *3 Years 7.65% *Since commenced operation 10.87%
Gross Fund Return 1 Month -1.22% 3 Months 2.02% 1 Year 1.22% *3 Years 9.70% *Since commenced operation 13.16%
S&P/NZX 50 Gross with Imputation Index 1 Month -1.86% 3 Months 0.22% 1 Year -5.98% *3 Years 6.62% *Since commenced operation 10.99%

*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.

The S&P/NZX 50 Gross with Imputation Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Forsyth Barr Limited. Copyright © 2015 S&P Dow Jones Indices LLC, a subsidiary of McGraw Hill Financial Inc., and/or its affiliates. All rights reserved. Redistribution, reproduction and/or photocopying in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

Divider

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 New Zealand Equities Fund.

Fund update

As at 31 March 2022

This document tells you how the New Zealand 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 New Zealand Equities Fund, and that Fund Updates may refer to the fund by that name.)
icon cta files dark 2png

General Fund Information

Risk indicator

Potentially lower returns
Potentially higher returns
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
Lower risk
Higher risk

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 5%
New Zealand fixed interest 0%
International fixed interest 0%
Australasian equities 85%
International equities 0%
Listed property 10%

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 1.15% 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.

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) or Financial Advice Provider Disclosure Statement (NZ) at www.morningstar.com.au/s/fsg.pdf and ww.morningstar.au/s/fapds.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser.
The Morningstar Rating is an assessment of a fund’s past performance – based on both return and risk – which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision.

How to invest in Octagon funds

Becoming an Octagon client is straightforward. Get started today.