#Slice of Pie
#Slice of Pie
4/11/2024 12:00:00 AM
#slice of pie

A Message from Mike: Infrastructure for Growth

Founder and Chief Investment Officer Mike Taylor puts forward the case for significant investment in New Zealand's infrastructure to address New Zealand current economic environment for the long term.

It was a lovely Easter weekend to mark the unofficial “end of summer” and I managed to get out and enjoy one of our country’s beautiful day hikes (along with 2,000 other people who had the same idea)!  We really are spoilt for choice in New Zealand, and I encourage you to get out and enjoy some of these national treasures in our own back yard. 

March was also a nice, settled month for markets around the world with most posting solid gains amid lower inflation, stable employment and positive economic growth (except for New Zealand which is in recession).

Our funds all performed strongly, with our Australasian funds having an excellent run. Highlighting Pie Australasian Growth 2, which was up 8.5% for the month bringing it to a 12 month return of 21.4%.

A good first 50 days could mean a great rest of the year. Over the last 70 years, there have been 25 occasions when US stocks have been up more than 5% in the first 50 days of the yearAnd on 24 of those occasions (a whopping 96%), markets then finished the year higher, with an average of 12.6% for the rest of the year. Stats like that should keep the bulls smiling.  The only exception was 1987, when markets experienced their biggest crash since 1929. So, while the odds of a good year in 2024 are high, we never take anything for granted as investors.

A final point on New Zealand and our current recession, to anyone who is listening that can make a difference, here is a long-term solution. Our infrastructure is ageing and inadequate, and cannot cope with the strong levels of migration we are experiencing. Solution? Prepare a 50-year infrastructure plan and finance the projects via “infrastructure bonds” which can be purchased by KiwiSaver Funds and NZ Super, as well as international investors. After all, isn’t that what our national savings should be used for? To invest back into our people and our country?

Interest to pay the bonds can be generated by a new tourist tax at the border (we don’t even charge tourists to walk some of our national walkways!), toll roads and levies. Projects could include a four-lane highway from Whangarei to Wellington, a high-speed rail between Auckland-Hamilton-Tauranga, a second harbour crossing, upgraded ferries between Wellington-Picton, a new Hospital in Hawkes Bay etc etc. To address the increasing demands that will fall onto our national electricity grid in the next 50 years due to electrification, I would propose mandating sufficient solar power installation in all new homes to independently power them. There are so many other simple ideas like this to stimulate growth and prepare us for the future. Many will say that we don’t have the work force or that this will take the country further into debt, but if a country goes into debt to fund growth via assets, then its less of an issue. A bit like having holidays and buying clothes on your credit card vs buying a house with a loan. In 20 years, the holiday is long forgotten, the clothes are in the rag bag, but your house is still there and worth a lot more. Anything is achievable, we just need a political party bold enough to do what is right for the people. Green, blue, red. It doesn’t matter.

If infrastructure interests you as an investment class, get in touch about our new Property & Infrastructure Fund, which invests in some of the key infrastructure assets in New Zealand and around the world.

2024 Tax Statements will be available by 15 May 2024 in the documents section of your online portal.

Founder & Chief 
Investment Officer

Becoming an investor with Pie has never been easier.

Information is current as at 31 March 2024. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme and Pie KiwiSaver Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.

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