NZ Funds Income Generator fund is designed to limit losses in a negative share market environment.
The fund provides a select portfolio of New Zealand and Australian companies with a focus on those paying high dividends with strong cash flows and reasonable valuations. These companies have avoided the worst of the 2022 sell-off so far, which has been led by high growth companies with expensive valuations.
Income Generator returned -0.5% in June. In comparison, New Zealand shares were down -3.8% and Australian shares were down -8.8%. Expectations of higher inflation, rising bond yields, and the growing expectations of a recession next year continue to affect share markets.
Since the start of the year, the Portfolio has significantly outperformed local and global share markets. The Portfolio is down -4.3% year to date compared to the New Zealand share market return of -16.3% and the global share market return of -20.0%.
Since its October 2020 inception, it has returned -0.25%p.a. which compares favourably to the New Zealand share market return of -8.48%p.a. over the same period.
NZ Funds retain a higher level of downside protection in the Portfolio through futures and options hedges, in anticipation of further potential share market volatility.
Check out NZ Funds’ June Review.
Contact us if you would like to discuss whether Income Generator might be suitable for you.