The Nikko AM Europe team manages this fund, investing in a selection of around 40-50 companies from around the world, covering a diverse range of regions and sectors. The manager selects companies where they believe there is potential for quality and future value.
Currency exposure created as a consequence of investment in global shares is 100% hedged to the New Zealand dollar.
Risk Indicator (volatility)
Target Asset Allocation
This number indicates the relative 'risk' level of this fund based on the types of assets it is invested in, ranging from level 1 (least risky) to 7 (most risky).
| Risk category | Description of volatility |
| 1 | Very low |
| 2 | Low |
| 3 | Medium |
| 4 | Medium to High |
| 5 | High |
| 6 | Very high |
| 7 | Extremely high |
The risk indicators are calculated using returns of the funds, the returns of the fund’s market index or a combination of both, for the previous five years. Index returns or a mix are used if the fund has existed for less than five years. All Managers are required to use the same methodology so you can compare the risk of different funds if you are researching more than one manager.
Commentary
As of 31 December 2024
Fund Commentary
Although no one theme dominates the portfolio, what is common across the holdings is the ability of the companies to raise pricing when required and continue to take market share. Across the globe, growth is scarce, and this scarcity has driven the ratings of those that can deliver. The premium for top-line growth is high, but so too is scepticism about AI returns. The hyperscalers continue to deliver 30%+ FCF margins and even higher returns on capital, and, as demonstrated in 2024, the opportunity cost of not investing in them is high. Price gains have been supported by earnings and cash flow growth, while higher-than-expected capex spending has spurred a range of beneficiaries—software, semiconductor, power, and electrical companies, to name a few.
Contributors: Netflix, Inc. outperformed due to continued subscriber growth and popular new content releases. The company's ability to consistently deliver engaging content helped it maintain its leading position in the streaming market, and we anticipate management will continue to deliver gains in 2025. Broadcom Inc. outperformed the market significantly after posting strong results in the last quarter. There was a large increase in demand for its AI solutions. Revenue was up 51% year-over-year, with a 220% rise in AI revenue. Interactive Brokers Group Inc. shares surged due to strong quarterly earnings announced in October and increased trading volumes post the US election. The company's robust platform and competitive pricing continue to attract more clients amid market volatility, boosting investor confidence. The chance of rising interest rates helps future earned income, and the Trump election success suggests that financial regulation may be relaxed, which should drive further gains for the company.
Detractors: Elevance Health, Inc. fell sharply after belatedly succumbing to margin pressure noted by Medicaid peers earlier in the year. This Medicaid redetermination process has had a much more profound impact on patient acuity than previous cycles, and Elevance had not priced their health plans on that basis. This has led to significant, temporary margin pressure in this book of business. Both Tesla, Inc. and Apple Inc. performed well in December, and given the zero weighting in both of these MAG7 stocks, they were among the largest detractors for the month. Uber Technologies, Inc. fell during the month. Negative sentiment on the timing of Tesla’s entry into the AV rideshare industry continues to weigh on the stock, particularly post the Trump election win. Investors are still trying to understand the potential role Uber will play in the AV industry if AV regulation is more favourable and the technology is rolled out faster than anticipated. The decision by Waymo to enter the Miami market but not use the Uber app was also taken as a negative.