Performance as at 30 June 2020
Performance is after the annual fund charge, and before tax and membership fees (if applicable). For more information, see legal information and disclaimers.
What happened this quarter (3 months to 30 June 2020)
- The New Zealand listed property sector rose 6.8% over the second quarter, regaining some losses from the first quarter. However, the index significantly underperformed the broader benchmark NZX 50, which finished the quarter up 16.9%. The index also lagged most global counterparts, with the international property sector rising 8.3% and the Australian property sector gaining nearly 20%.
- Of the 11 stocks that make up the New Zealand index, eight of them ended the quarter higher.
- A strong contributor to the fund’s performance was its underweight position in Goodman Property Trust. Shares in the company fell nearly 5% over the quarter, one of just a handful of companies in the NZX 50 to end the quarter lower. The weakness came after the company reported an 18% decrease in net profit for the year ended 31 March. Furthermore, the board said it would be dropping its pay-out ratio by at least 5.3 cents per share after the board revised down its pay-out ratio to between 80% and 90% of cash earnings.
- The fund also saw strong gains in its holing of Stride Property, which gained more than 30% over the quarter and was the best-performing stock in the listed property index. Despite headwinds from COVID-19, management guided to a flat dividend in FY2021.
- Elsewhere, the fund’s holding of Charter Hall Group proved beneficial, with the company ending the quarter up more than 40% after it reiterated its FY2020 earnings per share guidance. Adding to the upbeat sentiment was news that a number of Charter Hall’s funds made acquisitions over the quarter.
- Detracting from the fund’s performance was its underweight positing in Argosy Property, which finished the quarter up more than 30%. In May, the company announced a 1.5875 cent dividend, bringing the full-year pay-out to 6.35 cents. Then in June, the company sold an industrial asset holding in Wellington, which was 11% above its March valuation.
- Also holding back performance was the fund’s overweight position in Precinct Properties New Zealand, with shares in the company falling around 6%. Despite the rebound in property stocks, retail continued to underperform due to COVID-19 uncertainty.
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