Monthly review June 2014

Global markets delivered mixed performances in June. The US continued its strong run with the S&P500 up 1.9% while the UK FTSE shed 1.5% as concerns grew that the recent run in UK house prices would increase the possibility of the Bank of England having to raise rates sooner than previously expected. Japan’s Nikkei rallied 3.6% as the economy continued to produce strong economic numbers and confidence grew that the policies being pushed by new president Shinzo Abe, will break the country’s long-time concerns around deflation. Deteriorating sectarian violence in Iraq led to a rally in the price of oil.

The ASX200 fell 1.5% over the month (-3.1% in NZ dollars) as domestic data remained mixed following the recent budget. Australian first-quarter GDP rose a stronger than expected +3.5% relative to the same period last year, in part due to a large surge in resource exports. But this strong economic performance looks unlikely to be repeated this quarter as iron ore prices are under pressure and retail sales surprised to the downside in May. In early July, RBA Governor Stevens delivered a speech which watered down talk of rate hikes and emphasised the Australian Dollar is “uncomfortably high”. On an encouraging note, Chinese data looks to be stabilising with the HSBC flash PMI rising to 50.8 from 49.4 the previous month.

Significant market news from Australia included a range of profit downgrades from retailers including Kathmandu, Super Retail Group, Reject Shop and Pacific Brands due to poor consumer sentiment following the budget and a period of unusually warm weather. Also of interest to investors was the decision by Shell to sell-down most of its 23% holding in Woodside Petroleum. Shell has been long been viewed as a seller and the removal of the overhang is viewed as a positive for the stock.

Closer to home, the NZX50 fell 0.71% during June. New Zealand’s election is due on the 20th of September and early polls have shown the National party to be leading comfortably. Despite a National party win being seen as a tailwind for regulated sectors, weakening soft commodity prices and a decision by the RBNZ to raise the overnight cash rate to 3.25% weighted on the local bourse. Port of Tauranga rose 8% during the month after they announced a strategic 10-year alliance with freight and logistics management company Kotahi. Xero was the worst performing stock in the NZX50 falling 18% as tech stocks globally came under pressure and the company’s growth expectations were questioned.


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To 30 Jun 2014 3 mths % 6 mths % 1 yr % 2 yr p.a. % 3 yr p.a. %
Alpha Fund* 1.37 7.59 26.42 29.82 18.30
Australian Fund* 4.16 3.46 15.26 17.57 8.61
Equity Income Fund* 5.72 11.13 17.32 - -
Trans-Tasman Fund* 2.43 6.86 20.16 23.41 13.33
O.C.R. 0.75 1.39 2.66 2.58 2.56
ASX200G NZD 1.86 2.20 6.81 10.38 3.80
Trans Tasman Index Hedged 0.48 5.79 16.61 - -
Trans Tasman Index Unhedged 0.95 5.37 11.30 16.68 9.02

* Fund returns are before all fees and expenses, and before tax which varies by investor.

Past performance is not a guarantee of future returns.