Performance as at 31 March 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 31 March 2020)
- Share markets in New Zealand and Australia fell sharply over the quarter, with the NZX 50 falling 14.8% and the ASX 200 falling 24% – its lowest level since 2012. The two countries’ exposure to China was of particular concern as global trade came to a near halt as the COVID-19 (coronavirus) outbreak worsened.
- The fund’s holding of a2 Milk, New Zealand’s second-largest listed company, was of particular benefit. Shares in the company rose more than 14%, making it one of just three companies in the NZX 50 to finish the quarter higher. In February, the company reported a 32% increase in revenue and a 21% increase in EBITDA, for the six months ended 31 December 2019. Furthermore, the company benefited from its position as an essential seller of a quality product, which is hard to replace, even during a pandemic.
- Elsewhere, the fund’s underweight position in Air New Zealand was another strong contributor after shares in the airline fell more than 60% over the quarter as the COVID-19 (coronavirus) outbreak brought global travel to a near halt. In March, the company said it had cut 95% of its international flights, adding that revenue from international flights had declined by around 85%. In response to the deteriorating outlook for the company, the government lent the airline $900 million over the next two years.
- Detracting from performance was the fund’s holding of Treasury Wine Estates. Shares in the company ended the quarter lower after it downgraded its full-year earnings guidance. The company now expects earnings growth of 5–10% compared to its previous guidance of 15–20% growth. The company cited a decline in its Americas business.
- Other detractors included James Hardie, and Ryman Healthcare, which both finished the quarterly sharply lower, dragged down by the broad sell-off in Australasian markets.
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