Fund watch

How has the fund performed?

Performance as at 31 December 2022	3 months (%)	1 year (%)	3 years (% p.a.)	5 years (% p.a.)	10 years (% p.a.)
MFL Mutual Fund	-0.60%	-22.47%	-1.98%	3.42%	7.70%

Performance is after the annual fund charge and before tax.

Australasian listed property delivered mixed returns during the fourth quarter. The New Zealand listed property sector fell 3.4%. The typically defensive property sector faced headwinds as the Reserve Bank of New Zealand (RBNZ) continued its hawkish tightening of monetary policy. It raised the Official Cash Rate a total of 125 basis points to 4.25%, its highest level in more than a decade.

Across the Tasman, the Australian listed property sector fared much better, and was up 11.5% over the quarter (in local currency terms). This interest rate-sensitive sector did well on the back of broader Australian equity market strength and as the Reserve Bank of Australia delivered more modest rate hikes – at least compared to what it delivered earlier last year, and relative to New Zealand’s central bank.

Against this backdrop the MFL Fund fell 0.60% over the quarter.

During the quarter, the fund’s exposure to New Zealand retirement companies held back the fund’s performance, as this sector had a particularly challenging time following the RBNZ’s policy statement in November, which warned of higher interest rates ahead and a looming recession. Ryman Healthcare, Summerset Group and Oceania Healthcare had the lowest returns over the period.

Helping to offset some of these negatives was the stronger performance from some of the fund’s Australian retirement names, which did not seem to suffer the same fate. Lifestyle Communities and Aspen Group are two companies which both did well.

The fund’s holdings in international property also held back returns. We were underweight to the Hong Kong market, which did well on news China and was abandoning its ‘zero-COVID’ policy, increasing the chances of a reopening of the Hong Kong-China border, which has been closed for three years.

Although it’s been a challenging year for investors in the MFL Fund, and investors across all asset classes, we continue to prioritise companies with strong governance and a robust strategy for growing shareholder value. By focusing on quality companies with good management, it ensures the portfolio can withstand uncertain periods and thrive in times of optimism.

This article has been prepared by ANZ New Zealand Investments Limited (‘ANZ Investments’) for information purposes only and it should not be treated as financial advice.

MFL Mutual Fund Limited is the issuer and manager of the MFL Mutual Fund. ANZ Investments is not an authorised deposit taking institution (ADI) under Australian law and investments in the scheme aren't deposits in or liabilities of ANZ Bank New Zealand Limited, Australia and New Zealand Banking Group Limited, or their subsidiaries (together 'ANZ Group'). ANZ Group doesn’t stand behind or guarantee ANZ Investments. Investments in the scheme are subject to investment risk, including possible delays in repayment, and loss of income and principal invested. ANZ Group won’t be liable to you for the capital value or performance of your investment.

Past performance does not indicate future performance, and performance can be negative as well as positive. This material is for information purposes only. We recommend seeking financial advice about your situation and goals before getting a financial product.

Investment and administration manager: ANZ New Zealand Investments Limited.