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Welcome to the June edition of the Generate KiwiSaver Scheme Newsletter.
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Don’t miss out on your ‘Big Five Hundy’!If you’re anything like us you probably quite like the Government giving you money. It’s certainly a more appealing option than the other way round, which tends to be the norm!
To receive the full $521 Member Tax Credit from the Government you need to have deposited a minimum of $1042 into your KiwiSaver account before 27th June 2016.* Many of you would have done so already, but if you haven’t it’s not too late! Just jump on to internet banking and top up your KiwiSaver account as per the above and your ‘Big Five Hundy’ will be heading your way in July or August!
*This will allow time for the transaction to be completed by 30 June. You must be 18 years or older and New Zealand must be your principal place of residence in order to receive the Member Tax Credit. Other terms and conditions may apply. Further information is available in our Investment Statement.
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The month that was…May was another great month for your KiwiSaver scheme. First up we delivered some strong returns for our members (more on this later). We also chalked up another major milestone by hitting $200 million of funds under management. This is a huge vote of confidence from our 20,000 plus members. We will continue working hard to repay this confidence that has been placed in us.
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Warren Buffett WisdomsAfter 50 years at the helm of Berkshire Hathaway (which is currently one of our largest investments for both of our growth funds) Warren Buffett has become widely regarded as the world’s greatest investor. In his annual letters to shareholders, and in various interviews he has given, he has shared many of the lessons he has learned during his career. This month:
“The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money.”
Here Buffett points out that it is common for people to become lazy and take on ever-greater levels of risk the more success their share portfolios have enjoyed. Growing egos and greed can overshadow rational judgement. This is something we constantly bear in mind here at Generate i.e. are markets or individual share prices acting rationally – and if we think they are not – how can we take advantage of the situation?
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“Investing 101”Never invest money you cannot afford to lose.
One of the golden rules of investing – if not the golden rule of investing – is “never invest money you cannot afford to lose.”
It is a natural human tendency to want to overreach, by putting more money in than one can afford to lose, and go for the big ‘pay day’. This trait tends to be magnified if one’s financial situation deteriorates because of the hope that hitting the jackpot will make all problems go away.
The first goal in investing should always be to avoid major losses. Give potential investments the ‘sniff’ test – if it seems too good to be true then it probably is! Also be patient, and seek the advice of qualified, well-regarded investment professionals.
Finally, ensure the costs of making the investment are reasonable. This recipe may not sound overly exciting, but it is a tried and true formula.
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Global share markets continued their advance in May – adding to the positive momentum seen since markets “troughed” in mid-February. The MSCI All Country World Index gained a healthy 1.2% throughout the month (in local currencies).>>MORE
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The Conservative, Growth and Focused Growth Funds enjoyed a strong month in May returning 1.86%, 2.89% and 2.82% respectively (after fees and before tax). These results were particularly pleasing given the Funds are positioned more cautiously than usual. The Funds’ substantial investments in the retirement village/aged care sector were the major contributors to the positive performance.>>MORE
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Top Holdings as at 31 May 2016
Conservative Fund
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Growth Fund
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Focused Growth Fund
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International Equities Managers
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N/A
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Platinum International Fund
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T Rowe Price Global Equity Fund
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N/A
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Worldwide Healthcare Trust
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Platinum International Fund
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N/A
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T Rowe Price Global Equity Fund
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Worldwide Healthcare Trust
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N/A
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Magellan Global Fund
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Magellan Global Fund
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N/A
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Berkshire Hathaway
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Berkshire Hathaway
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Property and Infrastructure
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Infratil
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Infratil
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Infratil
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Ryman Healthcare
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Ryman Healthcare
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Ryman Healthcare
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Contact Energy
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Contact Energy
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Contact Energy
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Arvida Group
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Arvida Group
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Arvida Group
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Summerset Group
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Summerset Group
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Metlifecare Group
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Fixed Income and Cash
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Term Deposits
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Cash & Cash Equivalents
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Cash & Cash Equivalents
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Cash & Cash Equivalents
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Term Deposits
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N/A
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ASB Bank May 2021 Bonds
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The Warehouse Jun 2020 Bonds
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N/A
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GMT Bond Issuer 2017 Bonds
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Fonterra Oct 21 Bonds
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N/A
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ANZ Perpetual Bonds
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Port of Tauranga Oct 2019 Bonds
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N/A
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International Equities Manager SpotlightPlatinum International Brands Fund
Platinum Investment Management Limited is an Australian based fund manager, which specialises in investing in international equities. Platinum currently manages around A$25 billion.
The Platinum International Brands Fund's investment objective is to provide capital growth over the long-term by investing in companies around the world with well-recognised consumer brand names (including producers of luxury goods, other consumer durables, as well as food, beverages, household and personal care products, retailers and financial services).
Successful brand management allows a company to earn superior profits from what otherwise might be a commodity. This process entails the creation of an emotional bond between the consumer and the product/product provider, which allows the latter to charge a premium price. As such, successful brand owners have a tendency to achieve superior growth and profitability (than purveyors of commodities).
As of 31 May 2016 the Fund had A$1.1 billion under management and a return of 12.4% compound p.a. since inception in 2000 (in local currency). This compares with a return of 1.8% compound p.a. for the Fund's benchmark index (the MSCI All Country World Net Index in A$). Some of its top holdings included Callaway Golf, LVMH Moet Hennessy Louis Vuitton and Estee Lauder.
Next month: Berkshire Hathaway Inc.
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Contact usIf you have any questions after reading your newsletter, give us a call on 0800 855 322 or email us at info@generatekiwisaver.co.nz and we would be more than happy to help.
We thank you for your support,
The Generate Team
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