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Newsletter December 2015

Welcome to the December edition of the Generate KiwiSaver Scheme Newsletter. The month of November saw further gains for the Funds on top of the strong returns enjoyed in October. More on this below. Also in November, Generate featured in the media so you can find out some more about your KiwiSaver scheme here.

Warren Buffett Wisdoms

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, and in various interviews he has given, he has shared many of the lessons he has learned during his career. As we are currently in the midst of the silly season we thought we’d share one of Warren’s more light-hearted quotes with you this month:

“What’s the secret of a great marriage? It’s not looks, nor intelligence, nor money — it’s low expectations.”

Light-hearted as it is we suspect there is still some wisdom in it!

“Investing 101”


A derivative is a security which has its value ‘derived’ from a separate underlying asset.

Its value changes with price fluctuations in the underlying asset. The most common underlying assets include shares, bonds, commodities, currencies, interest rates and market indices.

However, derivatives do not have to be based on financial assets. For example, there are derivatives based on weather data, such as the amount of rain fall over a period of time in a particular region.

The derivative itself is a contract typically between two parties. When the value of the underlying asset goes up one party benefits; when it falls the other party gains.

Derivatives can be used for hedging, or insuring against risk on an asset. For example, at Generate we use foreign exchange forward (derivative) contracts to at least partially hedge our offshore investments from movements in their underlying currencies

Derivatives can also be used for speculation or betting on the future price of an asset.

Derivatives play a large part in financial markets. Last year the Bank for International Settlements calculated the total notional value of derivatives contracts around the world to be an astounding USD710 trillion dollars.

In our first newsletter of 2015 we predicted that the year ahead would be a more volatile one for share markets.  This proved to be accurate as in the month of August we saw volatility at levels not seen since March 2009. Despite this, several markets have managed to notch up solid year to date gains. For example Japan’s TOPIX is up 12.3%, the EuroStoxx50 has gained 11.4%, and the NZ50G has returned 9.6% (as at the end of November). >>MORE

In November the Funds added to the strong gains seen in October. The Conservative, Growth and Focused Growth Funds returned  0.45%, 1.19% and 1.48% respectively for the month (after fees and before tax). Their one year returns are >>MORE


Top Holdings

Conservative Fund Growth Fund Focused Growth Fund
International Equities Managers
N/A Magellan Global Fund Magellan Global Fund
N/A Berkshire Hathaway Berkshire Hathaway
N/A Platinum International Fund Platinum International Fund
N/A Worldwide Healthcare Trust T Rowe Price Global Fund
N/A T Rowe Price Global Fund Worldwide Healthcare Trust
Property and Infrastructure
Infratil  Infratil  Infratil 
Ryman Healthcare Ryman Healthcare Ryman Healthcare
Arvida Group Arvida Group Arvida Group
Summerset Group Contact Energy Contact Energy
Contact Energy Summerset Group Summerset Group
Fixed Income and Cash
Term Deposits Term Deposits Cash & Cash Equivalents
Cash & Cash Equivalents Cash & Cash Equivalents N/A
ANZ Perpetual Bonds Port of Tauranga Jan 2021 Bonds N/A
The Warehouse Jun 2020 Bonds The Warehouse Jun 2020 Bonds N/A
GMT Bond Issuer Sep 2017 Bonds Fonterra Feb 2022 Bonds N/A


International Equities Manager Spotlight

Polar Capital Technology Trust Plc.

Polar Capital Technology Trust Plc (PCT) provides investors with access to the potential of companies in the global technology sector.

Managed by a team of dedicated technology specialists, PCT has grown to become a leading European investor with a multi-cycle track record.

PCT believes that “we’re in the midst of a new technology cycle, driven by cloud computing, internet applications and mobility.” The Trust seeks to capitalise on such cycles, by gaining exposure to exciting emerging themes and harnessing potential returns through investing in companies believed to have the highest growth potential from across the global technology spectrum.

As at 30 October 2015 PCT managed GBP800 million of Total Net Assets and had returned an average of 12.7% p.a over the last 5 years (in local currency).

Next month: Platinum International Fund.

Contact us

If 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.

Kind regards,

The Generate Team