Fund watch
How has the fund performed?
| Performance as at 31 December 2024 | 3
months (%) |
1 year (%) |
3 years (% p.a.) |
5 years (% p.a.) |
10 years (% p.a.) |
| MFL Mutual Fund | -2.65% | 6.08% | -3.58% | 1.72% | 5.98% |
Performance is after the annual fund charge and before tax.
The New Zealand property sector struggled over the quarter, with the listed property index falling 1.9%, struggling against the backdrop of a slowing economy and broadly weaker economic data. Weak economic data included third quarter growth, as measured by GDP, which fell 1.0% over the quarter, while retail sales have now registered nine consecutive quarters of decline, and the unemployment rose to 4.8%.
The worsening economic backdrop prompted the Reserve Bank of New Zealand (RBNZ) to cut the Official Cash Rate (OCR) by 100 basis points over the quarter, and it forecasted several more rate cuts for 2025. Despite the cuts to the OCR, bond yields remained elevated – another headwind for the property sector.
Across the Tasman, the Australian property sector had a weaker quarter, falling 6%, but a stellar first half of the year saw the index deliver an 18.5% return over the year.
Against this backdrop, the MFL Property Fund fell 2.65% over the quarter. While it was a disappointing end to the year, the fund outperformed its benchmark, which fell 3.90%. Over one year, the fund’s return is 6.08%, versus the benchmark’s 6.23%.
Contributing to the fund’s relative outperformance were the overweight holdings of two retirement sector companies, Ryman Healthcare Limited and Summerset Group Holdings Limited. Both saw their share price rise by nearly 10%, benefiting from falling mortgage rates, as banks started to lower these in response to the OCR cuts. Falling mortgage rates are generally positive for prospective buyers of retirement units. Furthermore, the retirement sector remains buoyant following September’s takeover of Arvida Group, in signs the sector is attractive from a valuation perspective.
Some other strong performers were its holdings in Auckland International Airport and Port of Tauranga. While not property companies in the true sense, they both have a large property component associated to them. Auckland Airport was up 16%, as it found that its shares were highly sought after as Auckland Council sold its remaining shareholding in the company.
Strong selection within the fund’s international property holdings was also beneficial to relative performance, as some of the fund’s long-standing holdings in the healthcare and data centre sectors delivered good returns.
While there were strong individual performances, as alluded to above, weakness in the listed property sectors in both New Zealand and Australia weighed negatively on the fund’s absolute returns. A small underweight to cash also held back returns, at a time when cash outperformed.
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 the investment and administration manager. 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.