NZ Funds have released their Monthly Review for April 2022.
It reveals that the fund manager has used S&P500 and Nasdaq put options to generate significant returns in April, in a share market that has been falling. They intend to continue using put options while market volatility remains high and tending to the downside.
NZ Funds have also decreased their overall commodities exposure. They remain bullish on commodities, however there are short-term risks such as the strong United States Dollar and China lockdowns that could weigh on prices.
Their Income Generator fund is a relatively new fund, invested in premium New Zealand and Australian dividend paying shares. The fund is designed to limit losses in a negative share market environment. The fund’s specific investments are heavily weighted towards high dividend-paying companies with strong cash flows and reasonable valuations. These companies avoided the worst of the current sell-off which was led by high growth companies with expensive valuations. NZ Funds had already decreased overall share market exposure in November and December last year in anticipation of potential share market weakness. Their team retain the ability to limit the downside with futures contracts and options, as they anticipate further potential share market volatility.
Detailed commentary is available in their Monthly Review.