Fund watch
How has the fund performed?
| Performance as at 31 December 2023 | 3
months (%) |
1 year (%) |
3 years (% p.a.) |
5 years (% p.a.) |
10 years (% p.a.) |
| MFL Mutual Fund | 9.22% | 8.99% | -0.57% | 5.24% | 7.32% |
Performance is after the annual fund charge and before tax.
In New Zealand, the listed property index rose 6.7% over the quarter, helped in part by a sharp decline in bond yields. Although the Reserve Bank of New Zealand (RBNZ) maintained a relatively hawkish stance compared to many of its peers, domestic bond yields ended the quarter lower, with the yield on the New Zealand 10-year government bond 98 basis points lower. Meanwhile, the Australian listed property sector was one of the best-performing globally, rising 16.6%.
Economic data showed the New Zealand economy was still facing challenges on the inflation front. Although headline inflation fell to 5.6%, which was below forecasts, non-tradables inflation, a better indicator of domestic pricing pressures, fell to 6.3% from 6.6%. This was above several projections, including those of the RBNZ. Meanwhile, in December, GDP (Gross Domestic Product) data showed that New Zealand’s economy shrank by 0.3% in the third quarter of 2023.
The MFL Property Fund rose 9.22% over the quarter.
In terms of performance, a strategic underweight position to Argosy Property had an impact on relative performance. Although its shares finished the quarter higher, its 1.4% return was well short of the benchmark return and was the second-worst performing company in the listed property index. Its lacklustre performance on a comparative basis came after the company lowered its valuation by 2.3% due to cap rate expansion, which dropped its Net Tangible Assets (NTA) to $1.58 per share. Furthermore, the companies gearing rose to 36.3%, although still within its 30% to 40% range.
Elsewhere, the strong quarter for property fund managers saw the fund’s overweight to Charter Hall Group deliver strong relative returns with its shares closing the quarter up nearly 30%. With the prospect that bond yields have peaked, those property companies that are most interest rate-sensitive, notably fund managers like Charter Hall, were the strongest performers over the quarter.
Offsetting some performance during the quarter was two overweight positions in the retirement village sector – Ryman Healthcare Limited and Summerset Group Holdings Limited. Shares in Summerset rose 0.5% over the quarter, well behind its benchmark, while it was Ryman that was the main detractor, with its shares falling 6.5% making it one of the weakest-performing companies in the NZX 50 despite signs that the housing market has turned.
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.