Fund watch
How has the fund performed?
| Performance as at 30 September 2024 | 3
months (%) |
1 year (%) |
3 years (% p.a.) |
5 years (% p.a.) |
10 years (% p.a.) |
| MFL Mutual Fund | 14.43% | 19.02% | -1.28% | 3.44% | 7.13% |
Performance is after the annual fund charge and before tax.
The New Zealand listed property sector ended the quarter up 8.6%, benefiting from lower bond yields, while a drop in the rate of inflation also supported the interest-rate-sensitive sector.
The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 25 basis points in August, its first cut since the pandemic emergency cut in 2020. The cut came as economic data showed the local economy continues to struggle. Then in early October, the RBNZ followed up its August rate cut, with a 50 basis point cut, which took the OCR to 4.75%.
Weak economic data included a 1.2% decline in Q2 retail sales, while the unemployment rate rose to 4.6%, the highest level in more than three years. Meanwhile, the economy contracted by 0.2% in the three months to June 2024.
By the end of the quarter, interest rate markets were pricing in more than 200 basis points of cuts from the RBNZ over the coming 12 months, while the yield on the New Zealand 10-year government bond was 43 basis points lower at 4.2% over the quarter.
The MFL Property Fund rose 14.43% over the quarter.
Positive fund performance was largely driven by its overweight position to the strong-performing retirement sector. The best of the bunch was Arvida Group Limited, which saw its shares rise more than 70% following a $1.3billion takeover offer by US private equity firm, Stonepeak. The offer of $1.70 a share was a 65% premium to Arvida’s closing price prior to the announcement. Subsequently, shareholders voted overwhelmingly in favour of the takeover offer.
The Arvida news dragged three other retirement sector holdings higher, including Oceania Healthcare Limited (+39.6%), Ryman Healthcare Limited (+20.8%) and Summerset Group Holdings (+27%). Further benefiting the sector was a decline in bond yields. Lower bond yields tend to make the sector more attractive on a valuation basis, while improving the prospect of sales as borrowing costs are lower.
Other good performers included the fund’s holding of Australian property fund manager Charter Hall Group and Lendlease Group, the Australian construction company. Shares in Charter Hall rose more than 40% over the quarter. Although the company reported an after-tax loss of A$222.1 million and a reduction in group funds under management (FUM), the company’s forward guidance topped expectations. Meanwhile, Lendlease shares rose 32.5% over the quarter.
Fund watch 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.