Investing highlights & lowlights — April 2017

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Investing highlights & lowlights — April 2017.

A snapshot of the key factors driving the performance of markets and your funds last month

New Zealand Growth Fund
The NZX50 continued its very strong start to the year, rallying a further 2.5% for the month, its strongest rally since the hefty 6.5% rally in July last year. The New Zealand Growth Fund was down 0.1%, underperforming the market. Michael Hill was down 14% and was the largest drag on portfolio performance after they released reasonably soft third quarter sales growth, especially for Australia and New Zealand. The threat of Amazon entering Australia has also pushed down retail stocks generally.  On the flipside, Fisher & Paykel Healthcare was again our top contributor for the month, up 4%.

Australian Growth Fund
The Australian portfolio was ahead of the Aussie market over April. Key technology holdings Seek, and Technology One benefited as investors looked at the sector again after a long period of chasing mining stocks. CSL continued its strong run with the share pricing emerging growth opportunities in many of its business lines.

Coca-Cola Amatil downgraded its earnings guidance in response to persistently weak Australian demand for carbonated soft drinks.

International Growth Fund
April was another good month for global share markets and the International Growth Fund was up 5.2% for the month. The US reporting season is now well underway and expectations for first quarter revenue and earnings growth are at the highest level in years, highlighting an improving US corporate sector.

Results have so far been very positive for the portfolio, with three of our large cap US technology holdings Alphabet, PayPal and Amazon all reporting results ahead of expectations.

Beyond our technology holdings, Edwards Lifesciences delivered better than anticipated results, with sales of its transcatheter heart value replacement devices increasing by 32% globally, driving Edwards’ share price 17% higher over the month. Results from Graco, which manufactures industrial equipment for applying paint, further highlighted the strength in the US economy. Its sales grew 12% in the first quarter, supported by sales to the US Contractor segment, which jumped 26% during the period.

Property & Infrastructure Fund
The Property & Infrastructure Fund was up 2.4% in April. Flughafen Zurich was our top performer for the month, up 6%. The Swiss airport reported another month of solid passenger growth and Air China announced they will begin offering direct flights from Zurich to Beijing. The biggest detractor from performance was Kinder Morgan -4.6%. The oil and gas pipeline company’s share price fell after its results only met expectations and the projected rebound in oil and gas volumes continues to be delayed.

Income Fund
Fixed income markets posted another strong month of performance in April. Safe-haven assets, such as developed world government bonds, continue to see strong demand. However, it was our holdings in corporate bonds that were the star performers of the month. As prices of these assets march higher (and their yields fall) we have continued to reduce our holdings in them.

When our markets are as strong as they were this month, the biggest detractor from performance is often our cash holdings. Cash, however, is an integral part of our fixed income portfolios. It allows you, our clients, access to your money at short notice while also providing our investment team with the flexibility to be able to react quickly to opportunities when they present themselves.


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