Generate Fund Performance - May 2024

Returns to the 31st of May 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 new funds in May 2022, our original Conservative Fund was 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 equities bounced back in May, shaking off the gloom of a less-than-inspiring first quarter earnings season in the US and Europe. The Nasdaq was the star of the show, pulling back its losses from the previous month thanks to another outstanding earnings result from the king of AI, Nvidia. Expectations were already high leading up to the result as Nvidia’s dominance of the AI chip space is well known, but the sheer magnitude and quality of the earnings beat was impressive enough to send Nvidia shares up +27% for the month.

Our overweight position in Nvidia helped Generate’s global equities holdings deliver strong performance in May. Other companies in the technology arena also contributed strongly, such as Netflix, GoDaddy and Meta Platforms. Relative performance also benefited from not owning large-cap stocks that fell sharply in May, such as Tesla and Walt Disney, highlighting the advantages of our selective approach to investing. Our worst performing stock in May was the industrial manufacturing company, Atkore, which issued earnings guidance below market expectations in response to the uncertain economic outlook. While the result and share price reaction was disappointing, we like the cheap valuation and cyclicality of Atkore’s earnings to balance out some of the more expensive secular growth companies in the portfolio.

New Zealand & Australian equities

A weak economic environment and hawkish comments from the Reserve Bank of New Zealand (RBNZ), suggesting it will not cut the official cash rate until well into 2025, were enough to see the NZ share market drift lower in May (S&P/NZX 50 was down -0.8%).

There were a few companies that bucked the trend. The electricity generators/retailers all posted positive share price performances leading up to, and following an announcement that NZ's largest electricity consumer, the Tiwai Point aluminium smelter, had signed long-term electricity demand contracts removing the risk it would close later this year. The strongest share price performance came from Meridian Energy, the largest supplier to the smelter, up +12.7% in May.

Another strong performer was A2 Milk, which was up +14.9% for the month. Kantar data for April confirmed that the company was growing its share of the Chinese infant formula market. This suggests that all things equal, it should comfortably hit earnings guidance in August.

Summerset Group, a retirement accommodation provider listed on the NZ stock exchange, declined -14.4% in May. In part, this was due to the hawkish comments made by the RBNZ, which suggested a recovery in the housing market is unlikely to occur in the near term. The housing market is a key driver of retirement village operator returns. Selling pressure was intensified when one of Ryman’s largest shareholders moved to exit their entire holding, representing a little more than 5% of the company. Ryman is one of Summerset's competitors, so some investors no doubt sold Summerset stock to take advantage of this opportunity. As long-term patient investors, we are not overly concerned that the housing market recovery could be temporarily delayed, so we are happy to maintain the fund’s holding in Summerset.

Top Holdings as of the 31st of May 2024

Generate total Funds Under Management (FUM) as of 31st of May 2024: $5,398,559,553