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ASB Investment Funds
Market Review

Market review for ASB Investment Funds* for the quarter ending 30 June 2016.
* On 1 September 2016 EasyFunds was re-named ASB Investment Funds.

What happened in investment markets?

  • Brexit was the word on everyone’s lips during the quarter as the UK’s decision to exit the EU took markets by surprise and lead to significant volatility.
  • Over the quarter, the best performing fund was the Growth Fund with a return to investors before tax and after fees of 1.94%. This was followed by the Balanced Fund with a return of 1.90%.
  • Global Property Shares continued its strong run and was the best performing asset class over the June quarter with the FTSE EPRA/NAREIT Developed Rental Index (100% hedged to NZD) up 4.04% over the period. This was followed by Australasian Shares with the combined 67% S&P/NZX50 and 33% S&P/ASX200 Index (100% hedged to NZD) returning 3.11%.
  • Currency hedging was an important factor for returns over the period with NZD strengthening against most of the major currencies including the AUD, USD, EUR and lifting more than 10% on the GBP.

How did your fund perform this quarter?

Conservative Fund

On 1 September the EasyFund Defensive trust was re-named to Conservative Fund. The Conservative Fund forms part of ASB Investment Funds that transitioned to the Financial Markets Conduct Act 2013 on that date.

Fund objective: To provide investors with modest total returns with a negative return expected less than one in every 25 years.

  • The performance of the Conservative Fund (before tax and after fees) was 1.48% for the June quarter, with a return of 4.94% over the past 12 months.
  • The Conservative Fund benefitted from having a large allocation to both the NZ and World Fixed Interest asset classes, with the respective market indexes returning 1.74% and 2.20% over the quarter.
  • Both the NZ and World Fixed Interest sectors benefited from declining yields over the quarter. The rush to safety by many Investors and continued potential for further stimulus by central banks both applied downward pressure on yields, boosting the performance of the fixed interest sectors.

View the latest performance for Conservative Fund.

For more information on the Conservative Fund view the latest fact sheet.

Conservative Plus Fund

On 1 September the EasyFund Conservative trust was re-named the Conservative Plus Fund. The Conservative Plus Fund forms part of ASB Investment Funds that transitioned to the Financial Markets Conduct Act 2013 on that date.

Fund objective: To provide modest to moderate total returns with a negative return expected less than one in every 10 years.

  • The performance of the Conservative Plus Fund (before tax and after fees) was 1.69% for the June quarter, while the return for the past 12 months was 5.69%.
  • The 27.5% allocation to both NZ and World Fixed Interest provided the fund with the majority of the returns over the quarter.
  • NZ and World Fixed Interest enjoyed another strong quarter as yields continue to fall. An increased demand for fixed interest assets is often seen when market shocks occur and this was again evident following the UK’s referendum which helped fuel the healthy returns of the quarter.

View the latest performance for the Conservative Plus Fund.

For more information on the Conservative Plus Fund view the latest fact sheet.

Moderate Fund

On 1 September the EasyFund Moderate Trust was re-named the Moderate Fund. The Moderate Fund forms part of ASB Investment Funds that transitioned to the Financial Markets Conduct Act 2013 on that date.

Fund objective: To provide moderate total returns with a negative return expected less than one in every seven years.

  • The performance of the Moderate Fund (before tax and after fees) was 1.77% for the June quarter, while the return for the past 12 months was 5.55%.
  • The largest positive contribution to the fund’s quarterly performance came from the 25% allocation to World Fixed Interest although all other asset classes contributed significantly.
  • It was a strong quarter for World Fixed Interest as continued speculation over additional monetary policy easing and strong demand for “safe haven” assets following the UK’s decision to exit the EU pushed yields lower and supported higher bond prices.

View the latest performance for the Moderate Fund.

For more information on the Moderate Fund view the latest fact sheet.

Balanced Fund

On 1 September the EasyFund Balanced Trust was re-named the Balanced Fund. The Balanced Fund forms part of ASB Investment Funds that transitioned to the Financial Markets Conduct Act 2013 on that date.

Fund objective: To provide moderate to high total returns with a negative return expected less than one in every five years.

  • The performance of the Balanced Fund (before tax and after fees) was 1.90% for the June quarter, while the return for the past 12 months was 4.71%.
  • The 33% allocation to World Shares provided the Balanced Fund with the largest positive returns over the quarter closely followed by the 20% allocation to Australasian Shares.
  • World share markets started the quarter strongly, encouraged by the rebounding price of several commodities and although some of these early gains were reversed following the shock Brexit decision, most major share markets had positive returns over the period.

View the latest performance for the Balanced Fund.

For more information on the Balanced Fund view the latest fact sheet.

Growth Fund

On 1 September the EasyFund Growth Trust was re-named the Growth Fund. The Growth Fund forms part of ASB Investment Funds that transitioned to the Financial Markets Conduct Act 2013 on that date.

Fund objective: To provide high total returns with a negative return expected less than one in every four years.

  • The performance of the Growth Fund (before tax and after fees) was 1.94% for the June quarter, while the return for the past 12 months was 3.98%.
  • The 45% allocation to World Shares provided the largest positive contribution to the fund over the quarter with the allocation to Australasian Shares providing the largest contribution over the past 12 months.
  • Although it was a somewhat quieter quarter for Australasian Shares, the asset class has been the star performer over the past 12 months, particularly supported by the allocation to NZ shares where the S&P/NZX50 (with imputation credits) has lifted more than 20%.

View the latest performance for the Growth Fund.

For more information on the Growth Fund view the latest fact sheet.

Investment markets outlook

Considerable uncertainty remains regarding the global economy, with little additional clarity provided over the last quarter. Indeed, the surprise decision of the UK to exit the EU has added to the cloudy outlook. At the end of the quarter the UK had not triggered the formal exit mechanism and there is no set time for that to occur in. It now appears likely that the new Prime Minister will not start the formal exit process until 2017 so it is likely that the form of the new relationship between the UK and EU will continue to be unknown for some time yet.

Domestically, low inflation looks set to remain in place for some time, with the RBNZ not predicting a return to the 2% target until December 2017 and many banks/institutions forecasting for it to take much longer. The low global inflation environment should act to keep both NZ and global interest rates low for some time to come.

Disclosures and disclaimers

ASB Wealth Managers' disclosure statements are available on request and free of charge from your ASB Wealth Manager.The market information in this market review is based on information obtained from sources believed to be reliable and accurate at the time of preparation, but the accuracy and completeness of the information is not guaranteed. The information in this market review does not constitute personalised advice. Investors should seek independent investment advice. None of Trustees Executors Limited, ASB Group Investments Limited, ASB Bank Limited, their related companies or their directors, board members, officers or employees accept any liability whatsoever for any direct or indirect loss or damage of any kind arising out of the use of, or reliance on, the market information provided in this market review.

ASB Investment Funds

Interests in ASB Investment Funds are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides administration and distribution services for ASB Investment Funds. No person guarantees interests in ASB Investment Funds. Interests in ASB Investment Funds are not deposits or other liabilities of ASB. They are subject to investment risk, including possible loss of income and principal invested. For more information see the ASB Investment Funds Product Disclosure Statement available from the register of offers of financial products at www.business.govt.nz/disclose (search for ASB Investment Funds).

Past performance should not be seen as an indication of future performance as returns fluctuate according to market conditions. Returns are for periods after the commencement of PIE status. For all the above products this was 1 October 2007. The returns are calculated on the change in Exit Price of the Units in each fund for the period, adjusted for tax credits and are the returns on funds invested at the beginning of the period, with all distributions reinvested and no subsequent withdrawals or additional investments. Returns for periods greater than 1 year are annualised. Returns for periods less than 1 year are not annualised. The returns reflect the market indices and asset allocations that applied during the relevant return period. These may differ from the current market indices and asset allocations.

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