Welcome to the February edition of the Generate KiwiSaver Scheme Newsletter.

MEMBER NEWSLETTER FEBRUARY 2017

Welcome to the February edition of the Generate KiwiSaver Scheme Newsletter. We hope you had a great holiday season!

Performance of Our Funds

Returns to 31 January 2017 (after fees* and before tax).

  One Year Two Year (p.a.) Three Year (p.a.)
Conservative 4.74% 5.29% 7.30%
Growth 6.02% 5.37% 9.65%
Focused Growth 5.42% 4.44% 9.56%

*except the $3 per member per month fee.

Note: Past performance is not necessarily an indicator of future performance.

Following on from a strong November and December global equities (or share markets) have enjoyed a solid start to the year. The MSCI All Country World Index gained 1.5% (in local currency terms) in January. >>READ MORE

For the month of January the Conservative, Growth and Focused Growth Funds gained 0.90%, 1.10% and 0.89% respectively (after fees and before tax). The funds have gained further momentum in February and as of the time of writing had returned 1.32%, 3.12% and 3.84% respectively year to date (after fees and before tax). >>READ MORE

Warren Buffett wisdoms

After 50 years at the helm of Berkshire Hathaway (which is typically 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:

“It is not that we don’t understand a technology business or it’s product. The reason we don’t invest is because we can’t understand the predictability of the economics ten years hence.”

During the tech bubble of the late 1990’s Buffett was under intense pressure to “join the party” and start investing in tech or internet companies. Despite missing out on soaring share prices he held fast in the face of accusations that he had “lost his touch”. Tech market darlings did not meet his investment criteria and their outlandish valuations kept him at bay. When the tech bubble finally burst the Oracle of Omaha was left sitting pretty whilst tech investors licked their wounds.

What's New in KiwiSaver

If you haven’t already tried the new Generate online member area we would encourage you to give it a go. We are getting very positive feedback from new members who log in and experience all the functionality - especially compared to what they were used to seeing on their internet banking apps. Our functionality allows you to see your balance, the breakdown of contributions and performance, your transactions history and to switch between our funds with the click of a button. Importantly we also provide a full breakdown of all your direct investments so you can see exactly what your KiwiSaver account is invested in, or more importantly for some - what it is not invested in!

Investing 101

Short selling

Short selling (also known as shorting or going short) is the practice of selling an asset that you don’t actually own, in the hope that the price will decline and you can buy it back in the future at a lower level. You can then keep the difference between the price at which you sold the assets and the lower price you paid to buy them back.

When taking a short position in shares, for example, the shares are borrowed from a third party – usually a broker – and then sold. The short seller may have to pay a fee to borrow the securities and  have to reimburse the lender for cash returns the lender would have received had the securities not been loaned out. When the securities are repurchased they are then returned to the lender.

Some of the underlying International Equities Managers we invest into have the ability to short stocks. This can be helpful as, if executed wisely, it can limit or even reverse negative returns in falling markets.

Top Holdings as of 31 January 2017

Please log in to your account to see your full portfolio breakdown.

Conservative Fund Growth Fund Focused Growth Fund
International Equities Managers
N/A Berkshire Hathaway Berkshire Hathaway
N/A Platinum International Fund Platinum International Fund
N/A Magellan Global Fund Magellan Global Fund
N/A T Rowe Price Global Equity Fund T Rowe Price Global Equity Fund
N/A Polar Capital Technology Trust Polar Capital Technology Trust
Property and Infrastructure
Infratil Infratil Infratil
Arvida Group Ryman Healthcare Arvida Group
Contact Energy Arvida Group Contact Energy
Z Energy Contact Energy Z Energy
Ryman Healthcare Z Energy Ryman Healthcare
Fixed Income and Cash
Term Deposits Cash & Cash Equivalents Cash & Cash Equivalents
Cash & Cash Equivalents Term Deposits N/A
Kiwi Income Property Aug 2021 Bonds Rabobank Nederland Perpetual
Securities
N/A
ANZ Perpetuals Kiwi Income Property Aug 2021 Bonds N/A
Chorus May 2021 Bonds Fonterra Oct 2021 Bonds N/A

 

International Equities Manager Spotlight

Jupiter European Opportunities Trust Plc        
  

Founded in 1985 as a specialist boutique, Jupiter has become one of the UK’s most respected and successful fund management groups.

Jupiter European Opportunities Trust Plc's objective is to invest in securities of European companies and in sectors or geographical areas that are considered by the Investment Manager to offer good prospects for capital growth. The company adopts a stock picking approach in the belief that a thorough analysis and understanding of a company is the best way to identify long-term superior growth prospects. This understanding begins with identifying those companies with the right ownership structure and incumbent management.

As of 31 January 2017 the company had total assets of GBP 654 million and had returned 17.8% p.a over the last 5 years versus 12.5% p.a. for its benchmark (FTSE World Europe ex UK) in local currency. A recent fund data sheet can be found here .

Next month: Berkshire Hathaway Inc.