InvestNow News – 23rd October – Nikko AM – September Investment Update
Commentary from George Carter, Director of Nikko AM – 2020
The quarter ending 30 September provided investors with strong returns across all sectors; however, this was largely driven by the uplift in prices throughout July and August with the month of September seeing a modest pull-back in equity markets. During the month, the Growth fund fell slightly due to its higher exposure to equity markets, whereas the Conservative and Balanced funds saw positive returns as their exposures to the continuing strong run of performance from bonds more than compensated for their exposure to equities. Over the 12 month and 3 year periods, returns remain well ahead of long term expectations.
At the more granular level, we saw in NZ the larger firms which had been leading the market higher experienced a modest sell-off during September (specifically A2 Milk and Fisher & Paykel Healthcare), whilst the smaller cap names generally performed quite well as did the power generation companies that were supported following the news of a likely extension to the operations at Tiwai Point. Even with the weaker performance from some of the NZX larger names, the overall market in NZ still fared better than many global markets in local currency terms; however, investors who were unhedged (ie had exposures in foreign currencies) benefitted from a weakening NZ dollar which mitigated some of the losses.
Bond markets were generally strong as central banks continued with their programme of ensuring interest rates remain low. The yields in bond portfolios therefore remain low, but performance has exceeded these yields due to mark-to-market gains in the capital value of bonds held. Unsurprisingly, with equity markets pulling back slightly, it was the riskier corporate bonds that were the weaker performers, whereas the sovereign bonds provided the strongest returns in this sector. The Fund’s exposure to the alternative strategies (the Option Fund and the Muti-Strategy hedge fund) were positive during September at 1.6% and 0.7% respectively, and were additive to overall portfolio returns, as well as having the benefit of providing differentiated sources of market exposure.
InvestNow News – 23rd October – Nikko AM – September Investment Update
Commentary from George Carter, Director of Nikko AM – 2020
The quarter ending 30 September provided investors with strong returns across all sectors; however, this was largely driven by the uplift in prices throughout July and August with the month of September seeing a modest pull-back in equity markets. During the month, the Growth fund fell slightly due to its higher exposure to equity markets, whereas the Conservative and Balanced funds saw positive returns as their exposures to the continuing strong run of performance from bonds more than compensated for their exposure to equities. Over the 12 month and 3 year periods, returns remain well ahead of long term expectations.
At the more granular level, we saw in NZ the larger firms which had been leading the market higher experienced a modest sell-off during September (specifically A2 Milk and Fisher & Paykel Healthcare), whilst the smaller cap names generally performed quite well as did the power generation companies that were supported following the news of a likely extension to the operations at Tiwai Point. Even with the weaker performance from some of the NZX larger names, the overall market in NZ still fared better than many global markets in local currency terms; however, investors who were unhedged (ie had exposures in foreign currencies) benefitted from a weakening NZ dollar which mitigated some of the losses.
Bond markets were generally strong as central banks continued with their programme of ensuring interest rates remain low. The yields in bond portfolios therefore remain low, but performance has exceeded these yields due to mark-to-market gains in the capital value of bonds held. Unsurprisingly, with equity markets pulling back slightly, it was the riskier corporate bonds that were the weaker performers, whereas the sovereign bonds provided the strongest returns in this sector. The Fund’s exposure to the alternative strategies (the Option Fund and the Muti-Strategy hedge fund) were positive during September at 1.6% and 0.7% respectively, and were additive to overall portfolio returns, as well as having the benefit of providing differentiated sources of market exposure.
