Written by Paul Gregory, Group Head of Investments
We’ve had another bumpy month in most global markets. For a New Zealand-based investor like us, the New Zealand dollar dropping in value against the US Dollar after the big cut to the official cash rate has also been a factor.
A weakening New Zealand Dollar reduces the return on our New Zealand cash, but increases the value of our US companies. We’ve kept cash about 50%, the same as it was at the end of July, because we still don’t have any clear signals about where the market is going. But as we’ve said throughout these volatile months, we’re taking advantage of opportunities to pick up good companies, whose prices decline when the market dips. For us, that price drop is not a bad sign, it means ‘good value’. We now have direct holdings in 31 companies from 14 different countries including our first investments in South Korea.
After 28% PIR tax, but before fees, our high cash has been a drag on performance for the shorter time periods and for the Conservative Fund. The Balanced and Growth Funds are ahead of their market index for a year and the Growth Fund since inception. Following the reduction in the official cash rate, we adjusted the Product Disclosure Statement for the JUNO Growth Fund to permit investing in bonds. The Balanced and Conservative Funds can and do already invest in bonds. We will be looking carefully at whether we can use more fixed income to drive the returns of the income part of each fund’s portfolio.
*Fund performance is before fees and assumes a PIR of 28% (the highest PIR)
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. The Product Disclosure Statement is available at www.junokiwisaver.co.nz. Past performance is not an indicator for future performance. This is not intended to be financial advice and does not take into account any particular person’s circumstances. Before relying on this information, please speak to an independent financial adviser.