Generate Fund Performance - April 2024

Returns to the 30th of April 2024 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

Except for the $3 per member per month administration expense that is charged to KiwiSaver members.

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of our new funds, the Conservative Fund has been renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance. Generate’s fund updates can be found here.

International Equities

Global share markets (measured by the MSCI World Index) posted a weaker month in April (-3.7% in USD, -2.5% in NZD), pulling back after a strong first quarter in which they rose +9.1% in USD and +15.4% in NZD. This pullback was primarily driven by rising bond yields, which reduces the relative attractiveness of stocks compared to other investments, like bonds. We believe the rise in interest rates are mainly a result of economic strength in the US, rather than a cause for concern over the medium term. This view was supported by the recent US earnings season, in which most of the companies we own reported robust earnings results for the first quarter of the year. 

The best performers in our global portfolios in April were our two recent investments in Hong Kong listed stocks AIA Insurance (+10.0%), and Hong Kong Exchange (+10.4%). These are high quality businesses that have been caught up in concerns about China’s economy. While each business has some economic exposure to China, we invested in them earlier this year after concluding that their ~30% share price fall over the prior 12 months meant that their shares offered a compelling risk/reward opportunity. 

Google owner Alphabet was also a strong contributor to returns, rising +7.9% for the month. The market was encouraged by the company’s technical strengths in AI, and excellent financial results for the first quarter. 

Our worst performer during the month was Ulta Beauty, which fell -22.6% over the month after management suggested that growth was slowing down, and the company was losing market share. We have since sold out of our position in Ulta. 

New Zealand & Australian equities

April was a soft month for the local market with the S&P/NZX50 declining -1.2%. In aggregate, just a quarter of NZX50 stocks posted positive returns over the month as sharp declines in consumer discretionary stocks more than offset a strong performance by the healthcare sector. The S&P/NZX Real Estate index declined -2.7%, while the S&P/AXS200 (a broad measure of the Australian share market) dropped -2.9%.  

Fisher and Paykel Healthcare was the strongest contributor to the portfolio over the month, returning +11%. A handful of minor events drove this performance. First, the company released a new nasal pillow mask for the treatment of obstructive sleep apnea. Sales for this mask are already underway in New Zealand and a launch into the North American market is scheduled for later this year. Second, a local broker analyst upgraded their stock recommendation on the company from underperform to neutral. While interesting, the basis of this upgrade centred largely on potential earnings growth many years into the future from new anaesthesia products. Lastly, Fisher and Paykel earn much of their revenue in US dollars. Over the month the USD strengthened against the NZD by 1.5%, which means that the company’s offshore earnings translated into higher NZD earnings.  

Other notable movers were My Food Bag, a small position for the funds, which rose +7.6% in April without any notable news. Perhaps it was recovering from weak performance in the month prior. More meaningfully, Meridian Energy climbed +1.5% with speculation mounting that a long-negotiated power deal with New Zealand Aluminium Smelters is imminent. The deal is expected to raise the power price received by Meridian for supplying the smelter’s energy. 

Mirvac Group underperformed in April, declining -12.7%. Australian listed real estate was particularly out of favour last month with the S&P/ASX Real Estate Investment Index index declining -7.8% over the month. A second detractor came from the portfolio’s holding in Ryman Healthcare. Readers may recall that Ryman produced a particularly poor market update in February, which set the tone for weak trading. Ryman’s CEO then abruptly resigned in late April, compounding the market’s already negative sentiment. Ryman’s Chairman will act as Executive Chair while the Board looks for a new CEO. Ryman also reaffirmed their February issued earnings guidance in the announcement. 

Top Holdings as of the 30th of April 2024

Generate total Funds Under Management (FUM) as of 30th of April 2024: $5,221,411,842.22