9/8/2021 12:00:00 AM

Fund Reviews: Diversified


Read the latest on our Conservative Fund.

Written by Mike Taylor,  Founder & CEO

Conservative Fund

The Conservative Fund returned 0.7% for the month, bringing it to a 12-month return of 4.2%.

I’m pleased to report the Conservative Fund outperformed by a decent margin in August. This was achieved almost exclusively through stock picking. August is reporting season for the majority of our holdings and there was a strong showing across the board. Highlights include Australian property group HomeCo, which continues to beat expectations. They upgraded their three-year target by 100%. EBOS reported a solid set of numbers and is trading at all-time-highs. Z Energy received a takeover offer from Ampol at $3.78. We will continue to hold as there is the potential for another player to make a bid.

German meal-kit giant HelloFresh, which now has 70% market share in the US, also hit new highs and is up around 3x from first purchase. [email protected] UK is trading at new highs. The list goes on. There was even a rally back in the fund’s travel names!

My approach to our large cap holdings has been to own companies that I’m using in my everyday life (work or personal), I like the product/service, I know others feel the same and the company is on a growth trajectory. This explains the majority of positions, including the likes of Disney, JP Morgan, UBER, PayPal and Microsoft.

My approach to small cap is the same as when I was running a small-cap strategy. Pick a company that’s growing earnings and where there is room for the multiple to expand (typically this happens in the transition from small to medium/large). Examples include [email protected], HMC, HDN, SWM and Encavis.

In terms of bonds, nothing new in August and we remain underweight in government and corporate bonds and overweight in term deposits, where we can now pick up 1.2-1.5% on terms of 6-12 months. As the economic cycle progresses then we will gradually increase exposure to government bonds. It just makes no sense to buy short dated bonds, when if we just wait a year, all else being equal (ie the recovery continues) then the rate will be higher.

Information is current as at 31 August 2021. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management 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.