Nikko AM Australian Share W aims to outperform the S&P/ASX 200 Accumulation Index by more than 2.5% p.a. over rolling five-year periods, before fees, expenses and tax. The Fund is a managed investment scheme that invests predominantly, directly or indirectly, in a selection of Australian shares, with a strong preference for readily marketable securities. The Fund is designed for investors looking for long-term returns (capital growth and income) from a portfolio of shares which is actively managed by an investment team that seeks to identify shares that represent good value.
The S&P/ASX 200 Accumulation Index rose 6.04 % over the month. Australian equities were mid-pack relative to other global equities in September. Global developed markets rebounded strongly, as investors became optimistic that central bank tightening was close to done. All major markets finished the month up.
In local currency terms the DJ Euro Stoxx 50 returned 9.1%, the US S&P 500 returned 8.1%, the UK’s FTSE 100 returned 3.0% and Japan’s Nikkei 225 returned 6.4%. Monetary policy settings continued to tighten as the Reserve Bank of Australia (RBA) raised the cash rate target by another 25 bps, to 2.60% in October. While the pace of increases slowed, 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 run of strong domestic data releases continued through October. Retail turnover posted the ninth straight month of growth, up 0.6%. Business turnover for August increased in 12 of the 13 major sectors, with large increases in transport and manufacturing. The only sector seeing deterioration was information media & telecommunications. Inflationary pressures remain significant. The annual inflation rate in Australia climbed to 7.3% in Q3 of 2022 from 6.1% in Q2, above market forecasts of 7.0%. This was the highest rate since Q2 1990, boosted by higher prices for new dwelling construction, automotive fuel, and food. The Producer Price Index for the September quarter also showed continued pressure, particularly in building and engineering construction and electricity, gas and water.
What is Nikko AM Australian Share W Nikko AM Australian Share W 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 W has Assets Under Management of 704.50 M with a management fee of 0.8%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Nikko AM Australian Share W has returned 5.2% in the last month. The previous three years have returned 9.63% annualised and 14.58% each year since inception, which is when the Nikko AM Australian Share W first started.
How is risk measured in this investment product?
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 W first started, the Sharpe ratio is 0.43 with an annualised volatility of 14.58%. The maximum drawdown of the investment product in the last 12 months is -8.71% and -46.11% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
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 W has a 12-month excess return when compared to the Domestic Equity - Large Value Index of -4% and 0.18% since inception.
Does the investment product produce Alpha over its Peers?
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 W has produced Alpha over the Domestic Equity - Large Value Index of -0.32% in the last 12 months and -0.02% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Large Value Index category, you can click here for the Peer Investment Report.
What level of diversification will Nikko AM Australian Share W provide?
Nikko AM Australian Share W has a correlation coefficient of 0.96 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.
How do I compare the investment product with its peers?
For a full quantitative report on Nikko AM Australian Share W and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Nikko AM Australian Share W with the ASX Index 200 Index?
For a full quantitative report on Nikko AM Australian Share W compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Nikko AM Australian Share W to do my own analysis?
To sort and compare the Nikko AM Australian Share W financial metrics, please refer to the table above.
Has the Nikko AM Australian Share W been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Nikko AM Australian Share W?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Nikko AM Australian Share W. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - September 30, 2022 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%.
Domestic economic data releases were mostly positive through September. The Australian economy expanded by 0.9% in Q2, slightly below market forecasts of 1.0%. August employment remained robust, with total employment increasing by 33,500 positions, reversing the unexpected decline seen in July. While the unemployment rate ticked up 0.1ppts to 3.5%, this was a function of an increase in the participation rate. Job vacancies remain extraordinarily elevated with 474k unfilled roles. Retail sales remained resilient, increasing by 0.6% in August. This is the eighth month of consecutive increases. Within the subcategories, household goods returned to growth while clothing, footwear & personal accessories and other retailing both reported declines. The NAB Survey of Business Conditions increased further. Notably the survey suggested some slowing of growth in input costs. Capacity utilisation remains high across all sectors, supporting continued strength in employment.
Performance Commentary - August 31, 2022 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.
Performance Commentary - July 31, 2022 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.
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.
Performance Commentary - June 30, 2022 The Fund outperformed the benchmark over the month. 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.
Performance Commentary - May 31, 2022 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 the 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.
Performance Commentary - April 30, 2022 Key contributors to relative performance: • The overweight position in 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 Ramsay at $88 was pitched above the prevailing share price of $65.
• The holding in QBE Insurance contributed to performance. As bond yields continued to rise, improving investment earnings on its premium float are expected to have a meaningful impact on profits.
• The overweight holding in Coles contributed to performance, as expectations of interest rate rises led to outperformance by defensives. • The nil holding in Block contributed to performance. Block continues to be adversely impacted by the derating within the Nasdaq
Key detractors from relative performance: • The overweight holding in Aristocrat Leisure detracted from performance. The conflict in the Ukraine continues to weigh on the company, given it has design studios located in affected areas.
• The holding in Insignia Financial detracted from performance. Insignia’s quarterly business update showed an improvement in its fund flows but was more than offset by the impact of negative market returns on its funds.
• The underweight holding in CSL detracted from performance. CSL outperformed the market on positive incremental news with regard to recovery
Performance Commentary - July 31, 2021 The S&P/ASX 200 Accumulation Index returned 1.1% during the month. Australian equities lagged global markets which had mixed results in July. In the major developed markets the US S&P 500 was up 2.4%, the DJ Euro Stoxx 50 was up 0.8% and the UK’s FTSE 100 was up 0.1%. Japan’s Nikkei 225 was the laggard, down 5.2% (in local currency terms).
Monetary policy settings remained unchanged in July, as the Reserve Bank of Australia (RBA) maintained both the cash rate and 3 year yield target at 0.10%. The RBA also indicated it will maintain its government bond purchase program.
Domestic economic data releases in July were mixed. Q2 inflation was 0.8% for the quarter, but spiked to 3.8% for the year to the June quarter, largely reflecting the unwinding of some earlier COVID-19-related price declines. Employment rose by 29,100 positions in June. The unemployment rate fell to 4.9%, the eighth straight monthly fall. The NAB Survey of Business Conditions fell 12 points, to 24, down from its record high in May. Business confidence fell sharply, down to 11 (from 20 the month prior) as the latest COVID-19 outbreaks dented confidence. Retail sales rose 1.1% in April, which was in line with expectations. National CoreLogic dwelling prices saw another consecutive monthly rise in July, ending the month up 1.6%.
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