Article written by Roger Clayton, Salt Funds Management – 10th September 2020

The S&P/NZX50 Gross Index added a further +1.8% taking the year to date return to +3.9%. Top performers included Vista (+43%) Vector (+15%) and Chorus (+14%), whilst Sanford (-11%), a2 Milk (-11%) and Synlait (-8%) underperformed. The Fund moderately underperformed the benchmark in the month of August, rising by +1.06% compared to the +1.79% turned in by the S&P/NZX50 Gross Index. The largest headwind came from our overweight in Tower (TWR, -5%) which pulled back on light volumes for no particular reason. The strongest positive contributor was our long-standing overweight in Investore Property (IPL, +10.6%). In a world of remarkably low bond yields, IPL is very much flavour of the month due to its combination of relatively dependable top-line revenues, together with a lease duration that is far longer than its debt duration.

For more detail, the latest Salt NZ Dividend Appreciation Fund fact sheet can be found here.

NZ property stocks followed up their +7.1% surge in the month of July with a further lift of +3.11% in the month of August. Performance in the month was rationally led by those entities with ultra-long lease terms, namely Vital Healthcare Property (VHP, +10.3%) and Investore Property (IPL, +10.6%). The Fund slightly outperformed its benchmark in the month of August, rising by +3.29% compared to the +3.11% recorded by the S&P/NZX All Real Estate Gross Index. The largest single positive was the holding in Centuria Capital (CNI, +16.5%) following their partially scrip-based takeover of Augusta in NZ. Headwinds came from underweights in the increasingly expensive NZ market which were used to fund our Australian foray.

For more detail, the latest Salt Enhanced Property Fund fact sheet can be found here.