Welcome to the May Generate KiwiSaver Scheme Newsletter. During April the Funds had their 2 year anniversary. In the 2 years to the end of April the Conservative, Growth and Focused Growth Funds have provided a total return of 10.8%, 20.7% and 24.0% respectively (after fees and before tax).

Have you got your $521 Member Tax Credit from the Government?

If you are over 18 and mainly reside in New Zealand then your KiwiSaver account is entitled to $521.43 from the Government - as long as you have contributed $1,042.86 or more to your KiwiSaver account in the year to 30 June. If you haven’t done this already then it’s time get a move on as time is running out and this is the only investment we are aware of that guarantees a 50% return on your money!
 

After 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 he has shared many of the lessons he has learned during his career. This month:

“Cash… is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”

Here Warren talks about the importance of cashflow to companies and hence why Berkshire Hathaway likes to hold billions of dollars of cash on its balance sheet. In the past Buffet has employed his hoard of cash several times by buying into good companies that are in temporary distress because they have not been as diligent with their cashflow.

Risk versus Return – the Trade Off

The link between risk and return is the most fundamental rule of investing. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns.

Because of the risk-return trade off, you should be aware of your personal risk tolerance when making investments.

The goal is to find an appropriate balance - one that generates a satisfactory return in the medium to long term, but still allows you to sleep at night!

Jupiter European Opportunities Trust Plc

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

Jupiter European Opportunities Trust Plc's (JEO’s) objective is to invest in securities of European companies and in sectors or geographical areas which are considered 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. Alexander Darwall has been JEO’s Portfolio Manager for over 15 years and has delivered stellar performance over this time period.

As of 13 May 2015 the company had net assets of GBP543 million and had returned 22.7% p.a over the last 5 years versus 8.1% p.a. for its benchmark (MSCI AC EUROPE).

Next month:  Templeton Emerging Markets Investment Trust.