Market and Portfolio Update July 2022

Market Update

Prices of goods and services have continued to rise, with inflation numbers exceeding expectations around the world. In New Zealand we hit a 30-year high of 7.3%. Since this was released there has been a drop in a wide range of commodity prices, including oil, which has given hope to investors that we may be past the peak of inflation.

Central banks continue to raise interest rates in an effort to slow down business and consumer spending and to bring inflation back to more sustainable levels. NZ, Europe and US are amongst a long list of central banks that increased rates by another 0.50%-0.75% in the last month.

Labour markets remain historically tight, helping the perseverance of the economy. The most recent data shows unemployment in New Zealand at 3.3%, considerably lower than the 5% average that has been seen

Resilience seen in global bond and share markets in July

2022 has continued to be a unique year for investors with volatility in financial markets, high inflation, geo-political tensions, and rising interest rates still leading the narrative across the globe. Despite these factors still being the hot topic, July offered some positive news with bond and share markets having their best monthly performance so far this year. This has been driven by the belief from some investors that inflation is starting to peak and businesses and consumers remain in solid financial positions. Whilst it remains to be seen how the rest of 2022 will pan out for the global economy, it has been reassuring to see that there is still a high level of resilience to date.

The recent strength in financial markets has largely been driven by publically traded companies performing better-than-expected. Due to the recent economic conditions, investors across the globe were expecting companies to post results that reflected the hardships of the previous six months. Despite these expectations, a number of household names like Apple and Amazon instead had stories of strong resilience and a positive outlook for the coming months, particularly in the technology industry. This helped to unwind some of the recent declines and gave investors confidence in the businesses going forward.

New Australian Specialist Manager – DNR Capital

Alongside our in-house management of risks and opportunities within our portfolios, we utilise the expertise of specialist managers to actively manage a portion of investments within certain asset categories. We opt to use these external specialist managers where we believe they can add value through their vast ‘on-the-ground’ knowledge and analysis. We regularly review the makeup of these managers to ensure they continue to meet our expectations and deliver the value add we require for our clients. We also take this time to look for other opportunities to partner with new managers where we believe there may be potential to enhance the structure of our portfolios. As a result of this, we have recently partnered with a new specialist manager, DNR Capital.

Founded in 2001, DNR Capital is an Australian manager with an impressive track record of outperforming the Australian share market. They have a robust investment philosophy that has been in use since the company was first founded, and their ‘High Conviction Strategy’ has out-performed the market in 18 of the 19 years since its inception. Their investment philosophy starts with an assessment of ‘quality’, looking for companies with earnings strength, strong balance sheets, high calibre management, and low environmental, social and governance risks. Their assessment of a company’s quality is then matched with a detailed company valuation. Only the companies that offer the most attractive quality characteristics and valuation upside are then included in their final portfolio.

Although their investment philosophy has time and time again proven to deliver strong returns, this isn’t the only reason we selected them as an investment partner. DNR Capital is 100% staff owned, giving us confidence in the team they have on the ground and reassurance that their interests are aligned with investors. DNR Capital was also an early leader in Australian socially responsible investing (SRI) after launching one of the country’s first dedicated SRI strategies in 2006. With DNR also supporting socially responsible investment, we added the DNR strategy to our socially responsible funds, giving the benefit of their extensive knowledge and impressive track record to our investors.

The Booster KiwiSaver Scheme, Booster Investment Scheme and Booster SuperScheme are issued and managed by Booster Investment Management Ltd. For a copy of the Scheme product disclosure statements, go to