Returns to the 31st of August 2023
(after fees* and before tax)
Generate KiwiSaver Funds:
5 Year (p.a.)
10 Year (p.a.)
Generate Managed Funds:
5 Year (p.a)
10 Year (p.a)
Since inception (p.a)**
Focused Growth Managed Fund^
Balanced Managed Fund
Thematic Managed Fund
Australasian Managed Fund
- *Except the $3 per member per month administration expense that is charged to KiwiSaver members.
- ** The Generate KiwiSaver Scheme Focused Growth, Growth and Moderate funds opened on 16 April 2013. The Balanced, Conservative and Defensive Funds launched on 16 May 2022.
The Generate Focused Growth Managed Fund opened on 1 November 2019. The Balanced and Conservative funds opened on 16 May 2022.
^Following the launch of our new funds on 16 May 2022, the Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust was renamed as the Focused Growth Managed Fund.
- Past performance is not necessarily an indicator of future performance. Generate’s fund updates can be found here.
International equities update
Global equity markets took a step back in August with the MSCI World Index falling -2.35% in USD terms over the month. However, the index rose +2.1% in NZD terms due to the kiwi dollar weakening -3.9% against the USD in August.
Market weakness was primarily driven by concerns over "stagflation” – a term used to describe an economic environment with low growth, persistent inflation, and higher interest rates. Stagflation can lead to lower profit growth for businesses across the economy because funding costs tend to grow faster than revenues under these conditions. The prospect of “stagflation” meant that markets were uneasy about long-term US interest rates rising from 3.95% to a high of 4.34% over the month, prompting a pullback in asset prices.
Our global equity portfolios performed relatively well despite these concerns, with Eli Lilly and Novo Nordisk being the strongest performers. Both stocks rallied following a crucial study that suggested their obesity fighting drugs could significantly reduce the likelihood of major cardiovascular events in patients while also helping them to lose weight. Eli Lilly gained +22.2% for the month in USD terms, while Novo Nordisk gained +15.8%.
Nvidia was our next best performer, rising +5.6%, followed by Mastercard and Visa at +4.7 % and +3.5%, respectively.
Our weakest performers were mobile office provider WillScot Mobile Mini (-14.5%), and InMode, which slipped back -8.9% after gaining +14.9% in July following their strong quarterly results. We believe both businesses continue to perform very well, and we are not concerned about their recent stock price weakness.
New Zealand & Australian equities update
The NZ share market followed offshore shares by declining -4.2% in August. Many Australian and New Zealand companies reported their most recent financial results in August, and they were mostly in line with our expectations. Companies exposed to consumer spending and the housing markets are finding it tough, while travel/tourism related companies are enjoying a recovery in demand after the pandemic. Concerns about inflation proved well-founded with many firms citing rising costs as an ongoing business risk.
In large part, the reporting season helped our Australasian portfolio outperform its benchmark over the month. However, there were a few surprises.
For instance, we expected Chorus to safeguard against inflation by raising their prices, but their first-half 2024 guidance was a little softer than expected. Consequently, their share price underperformed the broader market, dropping -6.7% for the month.
Furthermore, National and Labour both announced plans to remove building depreciation as a tax shield if elected, triggering a devaluation in NZ’s property stocks. Analysis suggests that these policy changes could reduce after-tax income in New Zealand property companies by roughly -5% per year. Investore, a listed property company that owns a portfolio of large retail properties in New Zealand (predominately leased by Countdown and Bunnings), declined twice the sector average as a result (-16.1%).
On the positive side, both Australian listed property companies held in our portfolio, Mirvac and HomeCo Daily Needs, had strong months. They were the top performers in August, increasing +4.0% and +3.1%, respectively. Both companies reported results that were in line with expectations and included positive commentary about the next financial year.
Top Holdings as of the 31st of August 2023
United Health Group
T Rowe Price Global Equity Fund
Worldwide Healthcare Trust
Te Ahumairangi Global Equity Fund
European Opportunities Trust
Magellan Global Fund Closed Class
Fisher & Paykel Healthcare
Kāinga Ora Bonds
Local Government Funding Agency Bonds
Contact Energy Bonds
Investore Property Bonds