A SNAPSHOT OF THE KEY FACTORS DRIVING THE PERFORMANCE OF MARKETS AND YOUR FUNDS LAST MONTH

All Fund returns below are after fees & before tax

New Zealand Growth Fund

The big news in New Zealand markets was the ten year Government bond rate falling sharply, to near lifetime lows. This supported the strong performance of yield stocks such as telcos and electricity companies which are not our favoured sectors given the lower growth profiles. It was not surprising the NZ Growth Fund was modestly behind the NZ market, albeit with a healthy return of 4.9% (the NZX50 was +5.9%)

In portfolio news Synlait, processing partner of The a2 Milk Company released its first half 2019 result. This was meaningful as its maintenance of full-year guidance highlights a strong second half run-rate which reconciles with a2’s sales growth expectations. We continue to believe a2 still has strong growth prospects and have added to the position following the share price weakness in March the wake of its strong first half result in February.

We made a significant change by exiting our position in Michael Hill. The investment case has shifted and the longer term prospects for the business are increasingly challenged.  Positively the recent recovery in share price from depressed levels provided an opportunity to exit at an attractive price.