March saw the effect of Covid-19 have a much bigger impact at home as we, along with many other countries around the world, moved into lockdown with tight restrictions impacting our normal day-to-day lives. Meanwhile, share markets are also reacting and continuing to be volatile with the US S&P 500 index staging a dramatic partial recovery, up 18% in three days towards the end of March and up further so far in April.
While share market volatility can be a bit unnerving, especially with KiwiSaver being many Kiwi’s first foray into investing and sharemarkets, our disciplined investment approach really comes into play during these tough times. Our active management of client’s savings paired with strategic diversification, or carefully balancing your investment across different areas, have worked well to ease some of impact the markets can have on our investors. This combination of strategic planning and good risk management goes in ahead of time and doesn’t necessarily show during the ‘good times’, but it really shows in times like this when its needed.
As they say, the proof is in the pudding, and looking at a few examples shows this to be true. Despite recent volatility, these strategies have shown that a Booster KiwiSaver Scheme Balanced Fund is down less than 1% in the last 12 months to end of March (after fees, before tax). Likewise, the High Growth Fund (with more investment into shares) has still delivered positive returns over the last two years.
In order to paint a better picture of what our Research Team has been hard at work in creating these strategies for you, our investors, here’s a bit of insight into these changes they have made and how they really present value for your investments.
In today’s world, immediate access to information can have a massive influence on our daily lives. It’s very easy to read a few headlines about share markets and think that it directly translates over to your own KiwiSaver or investment portfolio. But our Booster Research team works hard at a few different strategies which means that often this isn’t the case. These strategies are nicknamed ‘shock absorbers’ by the team as they help deliver more solid outcomes over the long-term.
Across Booster’s core investment funds, these key strategies include:
We allocate over a third of your global share investments to two concentrated, active strategies from California-based Fisher Investments and Rothschild Bank in Zurich. So far in 2020, through to the end of March the part of our global shares managed by California-based Fisher Investments has performed 8% better than the global share markets on average and our direct share portfolio partnership between Booster and Rothschild Bank in Zurich performed 13% better than the market – doing a great job of helping to ease the drop in markets.
A big driver of these results has been investing in strong businesses with good financials and steady cashflow. Some of our standout investments include Amazon (up 19% for the year to 31st March) and Microsoft, both in a great position given their demand during these tough times of working from home and isolation throughout the world.
We’ve also made other changes to some of our investments given the current dynamic climate:
History has shown us time and time again that the markets will ultimately recover from ‘shocks’ and often the recovery starts while the headlines are still sounding a bit doom and gloom. While we are all aware of the short-term challenges we are facing during this epidemic, its also clear that governments and central banks around the world are all “taking the gloves off” to support their economies through these short-term struggles. These measures really help to support businesses and economies through the tough short-term to the other side, unfortunately, with a few inevitable business casualties along the way.
From an investment perspective, our task is to really look at the future outlook for our investors, not the last few months. Here at Booster, we expect our focus on quality businesses and fixed interest investments puts our investors’ portfolios in a good position to weather the storm during this time and provide more areas of opportunity as the ‘light at the end of the tunnel’ starts to shine a bit brighter.
“Booster KiwiSaver Scheme is managed and issued by Booster Investment Management Ltd. A copy of the Product Disclosure Statements are available at www.booster.co.nz. A disclosure statement is available from your financial adviser, on request and free of charge."