Investing highlights and lowlights - FF TWO KiwiSaver & LifeSaver 2022 | Fisher Funds Scroll

Investing highlights & lowlights

May 2022 - FFTWO KiwiSaver & LifeSaver

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08 June, 2022

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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 

The New Zealand Growth Fund fell by -5.6% in May, more than the local market decline of -4.8% (S&P/NZX 50). The companies that had the largest share price moves were: 

Retirement village operator Ryman Healthcare (+9%) announced results for the second half of its 2022 financial year, which beat expectations. Underlying profit was +17% on the comparable period, supported by strong development margins and record sales in Victoria, Australia. The company also forecast delivering over 1000 retirement units and beds for the new financial year, close to a +50% increase on the latest financial year. 

Business travel software company Serko (-29%) announced its results and provided guidance for the next year for revenue to "approximately double" from $20 million. Its partnership with industry giant is expected to grow quickly from a small base with the focus is on further product enhancements to drive engagement and usage. The company still has a medium-term target of increasing revenue to over $100 million.


In May the Australian Growth Fund fell by –6.0% , which lagged the -2.4% return for the benchmark index. The share price volatility continued in May, although did seem to settle towards month end.  

Audinate has had a tough start to the year, with investors concerned about its ability to source sufficient micro-chips to supply its customers with its Dante technology audio products. Pleasingly, after a positive trading update in late April, Audinate’s share price rebounded +8.3% (in A$) during May. Audinate confirmed in the trading update that it was on track to meet market expectations for FY22. It also noted that the chip shortages had peaked in January and February, and it had secured sufficient chips to meets its order backlogs which remain at record levels. 

Fineos (-21.4%) fell sharply in the month despite releasing a trading update re-affirming FY22 earnings guidance. As a fast-growing tech company, Fineos’ share price has been impacted by the drop in technology shares globally. In addition, as a smaller technology company with less liquidity in its daily share trading volume its share price moves can be amplified if large investors change their shareholding. In May, there were a few meaningful changes to its shareholder register and we suspect this exacerbated its share price volatility in the month. We note the CEO bought a further $1m of shares during the month which we view favourably. We do not think Fineos’ share price move during the month is reflective of a deterioration in its long-term earnings potential.


The core international equity portfolio enjoyed another month of positive returns as global bond yields finally stabilised and annual inflation in the US cooled slightly.

Value stocks outperformed growth stocks for another month. Energy companies were the strongest sector while Real Estate and Consumer Staples were the laggards. UK, Italy, Germany, Spain and Japan saw gains while US, Swiss and French stocks weakened.

After an initial sharp dip, the New Zealand dollar recovered to be up 1% over the month.

The portfolio benefited from its modest overweight to Utilities and Communication Services sectors while the underweight to Energy detracted from returns. Holdings in Verizon Communications and Deutsche Telecom (both up 10%) were strong contributors while the overweight to Swiss pharmaceutical giant Roche (down 9%) detracted from returns. Underweights to energy names such as Exxon Mobil (up 13%) and Chevron (up 12%) were again a drag on returns relative to the benchmark.

Geographic positioning had no significant impact on performance this month. The portfolio is slightly underweight Asia and overweight the UK and Canada. In terms of industries, its largest overweights are to healthcare, consumer staples and materials and away from information technology, consumer discretionary and energy.

The outlook is likely to remain heavily influenced by two key factors: the battle against inflation by central banks and the war in Ukraine. Both seem likely to drag on for some time and continue to create volatility.

Fixed Interest 

It has been a difficult year for fixed income investors given the rising interest rate environment (as a reminder, when interest rates rise, bond prices fall). However, some semblance of stability returned in May, with the fund’s return essentially flat for the month. 

On the domestic front, the Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) from 1.5% to 2.0%. In addition, the Bank signalled it will likely lift the OCR by 0.5% at each of its next two meetings, followed by a series of 0.25% hikes thereafter. They now expect the OCR to peak around 4.0% in the middle of next year. 

We have been slowly increasing exposure to short-dated NZ fixed interest assets as the lower prices now on offer embed an even higher future path for the OCR than the one anticipated by the RBNZ. 

Away from this local event, several of our offshore corporate investments reported earnings during the month. Microsoft released its Q3 2022 earnings which were very solid with sales increasing 18% year on year and this top line growth flowed through to higher profitability and cash flow. The company’s balance sheet remains strong with the group having plenty of cash on hand to support ongoing product development initiatives. 

Altice International, the European-based telecommunications group, released encouraging Q1 2022 results. Portugal is the group’s main operating region and in this market the company reported a 12% revenue increase which was driven by growth in post-paid subscriptions. The executive team reiterated an expectation for continued revenue and cash flow growth, and we remain confident in the group’s ability to execute on this aspiration. 

A lowlight within the portfolio was our investment in the Italian bank Intesa Sanpaolo S.p.A. There was no material new information that caused our bonds to underperform and while disappointing in the short term, we remain confident in the bank’s long-term prospects given its national champion status within the European banking sector. 

Given the steady rather than stellar outlook for economic growth, we continue to actively engage with the executive teams of our portfolio companies and are closely monitoring their end markets. We believe this will give us the best opportunity to navigate this challenging environment and produce stable long-term returns on your behalf.

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