Nikko AM Australian Share Income is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Value Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Nikko AM Australian Share Income has Assets Under Management of 172.00 M with a management fee of 0.85%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.
The recent investment performance of the investment product shows that the Nikko AM Australian Share Income has returned -0.54% in the last month. The previous three years have returned 6.22% annualised and 14.01% each year since inception, which is when the Nikko AM Australian Share Income first started.
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Nikko AM Australian Share Income first started, the Sharpe ratio is NA with an annualised volatility of 14.01%. The maximum drawdown of the investment product in the last 12 months is -7.06% and -31.3% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Nikko AM Australian Share Income has a 12-month excess return when compared to the Domestic Equity - Large Value Index of -0.88% and -0.52% since inception.
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Nikko AM Australian Share Income has produced Alpha over the Domestic Equity - Large Value Index of NA% in the last 12 months and NA% since inception.
For a full list of investment products in the Domestic Equity - Large Value Index category, you can click here for the Peer Investment Report.
Nikko AM Australian Share Income has a correlation coefficient of 0.97 and a beta of 0.96 when compared to the Domestic Equity - Large Value Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
For a full quantitative report on Nikko AM Australian Share Income and its peer investments, you can click here for the Peer Investment Report.
For a full quantitative report on Nikko AM Australian Share Income compared to the ASX Index 200 Index, you can click here.
To sort and compare the Nikko AM Australian Share Income financial metrics, please refer to the table above.
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The Fund outperformed the broader equities market during the month (on a net basis).
The Fund has delivered a grossed up dividend yield of 11.40% over the past 12 months and continues to exceed its long-term performance objective, by delivering an excess grossed up dividend yield greater than 2.00% p.a. above its benchmark since inception.
The S&P/ASX 200 Accumulation Index was down 6.2% during the month. Australian equities outperformed global equities in September, with the size of our Materials sector a differentiating factor. Global developed markets continued to sell off through September as central banks continued to tighten rates. All major markets finished the month down. In local currency terms the DJ Euro Stoxx 50 returned -5.6%, the US S&P 500 returned -9.2%, the UK’s FTSE 100 returned -5.2% and Japan’s Nikkei 225 returned -6.9%.
Monetary policy settings continued to tighten as the Reserve Bank of Australia (RBA) raised the cash rate target by another 50 bps, to 2.35% in September. The RBA also flagged further increases in the months ahead, as part of the process of normalising monetary conditions, albeit subject to future economic data. The board remains committed to ensuring inflation returns to the target range of 2-3%.
The S&P/ASX 200 Accumulation Index returned 1.2% during the month. Australian equities outperformed global equities in August on the back of a resilient local reporting season. Global developed markets struggled in August as the rate tightening resolve from the US Federal Reserve dampened investor sentiment. In the major developed markets (in local currency terms), the DJ Euro Stoxx 50 returned -5.1%, the US S&P 500 returned -4.1% and the UK’s FTSE 100 returned -1.1%. In contrast, Japan’s Nikkei 225 returned 1.1%
Monetary policy settings continued to tighten as the Reserve Bank of Australia (RBA) raised the cash rate target by another 50 bps, to 1.85% in August. The RBA expects further tightening in the process of normalising monetary conditions as they are committed to ensuring that inflation returns to the target range of 2-3%.
Domestic economic data releases in August were mixed. Employment unexpectedly fell by 40,900 positions in July, the first fall in nine months. The unemployment rate fell to a new record low of 3.4%, which was also below market expectations. The NAB Survey of Business Conditions strengthened by 6 points to 20 index points in July. Business confidence rebounded 5 points in July, to 7 index points. Retail sales were up 0.2% in June. CoreLogic’s National Home Value Index recorded a fourth consecutive month of value declines, down 1.6% in August.
Key contributors to relative performance: • The nil holding in Newcrest Mining contributed to performance. Newcrest Mining underperformed on weaker gold prices. In company specific news, while Newcrest’s quarterly results narrowly beat consensus, production concerns were raised around cost inflation. • The overweight in Insignia Financial contributed to performance. Insignia outperformed following an update highlighting a continuation in the improvement of net flows (before pension payments) into its platforms, and it has now reported positive net flows. • An overweight position in Downer EDI contributed to performance. Downer outperformed despite any relevant news or updates by the company in the period.
Key detractors from relative performance: • An overweight position in QBE Insurance detracted from performance. QBE underperformed as the general insurance sector fell on the back of falling bond yields as recession concerns elevated. • The overweight position in Ramsay Health Care detracted from performance. Despite a nonbinding takeover offer to acquire the business by KKR. Ramsay’s share price has drifted whilst waiting for the deal to progress.
Key contributors to relative performance:
• Woodside Energy outperformed, as the BHP Petroleum merger came into effect and was viewed favourably by the market dispelling fears of substantial forced net selling by BHP shareholders who received Woodside Energy stock in exchange for the Petroleum assets. Oil prices were volatile through the month, but little changed as supply concerns and recession risks appear more balanced in oil markets than for metals. • Coles outperformed, as prospects of a recession and along with higher inflation, led investors to favour the defensive characteristics of its supermarket business. The supermarket industry is rational, with cost inflation being readily passed on to consumers, Coles is expected to perform well in this economic environment.
Key detractors from relative performance: • 29Metals underperformed the market largely on the back of falling commodity prices, particularly copper and fears of a more prolonged slowdown in China’s property sector. • The underweight holding in CSL detracted from performance. Behring’s the main blood plasma dependent business unit’s outlook was boosted by data released by the Plasma Protein Therapies Association, confirming previous statements by CSL that plasma collections had recovered to prepandemic levels. • The nil holding in Woolworths detracted from performance. Woolworths outperformed as investors become increasingly concerned about prospects of a recession and a higher inflation outlook, the market valued the defensive qualities of its supermarket business
Key contributors to relative performance:
• The nil holding in Goodman contributed to performance. Goodman underperformed the market after Amazon reported a softening of consumer demand and may have over committed to industrial space used to manage its inventory. • The nil position in Macquarie contributed to performance. Macquarie reported a record full year profit result driven by very strong market facing business income and asset sales. However, guidance for FY23 was typically conservative and below FY22 and thus the stock underperformed.
Key detractors from relative performance:
• The underweight holding in Commonwealth Bank (CBA) detracted from performance. CBA outperformed after the banks announced results which indicated that margins would improve as rates rise.
• Coles detracted from performance. Along with other consumer staples, Coles gave back the outperformance of the previous month due to weak results from Walmart and Target in the US. However, these results are not relevant to Coles as the issues were in the general merchandise areas, not groceries.
Key contributors to absolute performance over the month:
• Ramsay Health Care contributed to performance, on the back of a conditional, non-binding indicative proposal from a consortium led by private equity firm KKR. The proposal to buy 100% of the shares in
Aurizon had a strong month contributing to performance, despite rising interest rates. The company announced a favourable Federal Court decision on a technical issue that will give it capital management flexibility going forward. • Orora contributed to performance, supported by it share buy-back and increasing confidence in the turnaround of its North American businesses
Key detractors from absolute performance over the month: • BHP and Rio Tinto detracted from performance. Iron ore prices fell, due to a combination of factors including concerns around rising Chinese COVID cases and strict lockdown policies as well as weaker than expected economic data in China. • Insignia Financial detracted from performance. While its quarterly business update showed an improvement in its funds flows, it was more than offset by the impact of negative market returns on its funds. • Commonwealth Bank detracted from performance, slightly underperforming the market and other banks. While banks performed well during March on expectations of margin benefit from interest rate rises, they gave back some of this outperformance during April.
The Fund outperformed the benchmark over the month.
Key contributors to relative performance:
• The nil holding in Wesfarmers contributed to performance. Despite earnings being close to guidance, the very weak results from Department Stores and Officeworks raised concerns. Our view is that the market has been overly focused on the “good” part of Wesfarmers, Bunnings, and ignored the issues in the lesser operations.
• Ardent Leisure contributed to performance, on the back of its primary asset, Main Event, continuing its strong recovery, where revenue is running well ahead of pre-COVID levels
The S&P/ASX 200 Accumulation Index returned 2.1% during the month. Australian equities outperformed global equity markets in February, on the back of a largely positive reporting season. Global markets struggled during the month as rising geopolitical tensions made for an uncertain outlook. In the major developed markets, the DJ Euro Stoxx 50 was down 5.9%, the US S&P 500 was down 3.0% and Japan’s Nikkei 225 was down 1.7% (in local currency terms). The UK’s FTSE 100 bucked the trend to be up 0.3%.
Returns at sector level were wider than normal in February. The best performing sectors were energy (8.6%), consumer staples (5.6%) and materials (5.2%). Utilities (3.4%) and financials (3.0%) also outperformed the broader index. Real estate (1.7%), industrials (0.4%), health care (-0.2%), communication services (-2.2%) and consumer discretionary (-5.0%) all underperformed the broader index, while information technology (-6.6%) was the worst performing sector.
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