NZSX50 - Good News!

[bull....]

The launch of market leading home loan rates by subsidiaries of China's main banks signals a more active role in retail banking here. We profile the institutions

https://www.interest.co.nz/banking/1...s-signals-more


after the banking sector now , probably good timing when new rbnz capital requirements come in add to the t/o of dairy industry as well and they are becoming well positioned.

[bull....]

Reserve Bank says low interest rates 'an opportunity'

https://www.nzherald.co.nz/business/...ectid=12271333

orr probably feels like hes talking to a brick wall lol needs to relize politicians dont have vision or much common sense.

[SailorRob]

Does anyone know why the quoted PE ratio of the smartshares NZX 50 fund (NZX FNZ) is only 7? I though the PE of the fund should roughly match the PE of the index which must be far higher than that. Also on the topic does anyone know the mechanics of the NZX 50 PE ratio as commonly quoted, i.e. how is it calculated?

Thanksin advance

[blackcap]

Does anyone know why the quoted PE ratio of the smartshares NZX 50 fund (NZX FNZ) is only 7? I though the PE of the fund should roughly match the PE of the index which must be far higher than that. Also on the topic does anyone know the mechanics of the NZX 50 PE ratio as commonly quoted, i.e. how is it calculated?

Thanksin advance

I think I have the answer. Looking at their financial statements i see they made 43.07 cents per share. On a share price of about $3.00 that is a PE of 6.96.
Hope that makes sense.

Note: Dividend earnings make up 28% of earnings. The remainder is in a category called "Net changes in fair value of financial assets at fair value through profit or losss".

https://smartshares.co.nz/document-l...aded-funds.pdf

page 324 if you don't want to go for a long scroll.

[SailorRob]

Thanks blackcap, I agree this seems right but that would then imply that the overall PE ration of the NZX 50 index was only 7 which it's supposed to be more like 24... I'm missing something.

[Tronald Dump]

Thanks blackcap, I agree this seems right but that would then imply that the overall PE ration of the NZX 50 index was only 7 which it's supposed to be more like 24... I'm missing something.

The PE of the market is the average of the PEs of all the companies in the index. The PE of FNZ is not the average PE of the underlying shares in the portfolio, it's calculated as described above. Hope that makes sense.

[blackcap]

Thanks blackcap, I agree this seems right but that would then imply that the overall PE ration of the NZX 50 index was only 7 which it's supposed to be more like 24... I'm missing something.

You are missing the fact that this is a fund and has different accounting treatments than the underlying assets it holds. Read the financial statements and you will see what the differences are. This fund makes profit but the profits from the underlying assets it holds are not paid directly to the fund. The fund only receives dividends but an accounting construct called "net changes in fair value... etc" make up a huge portion of their earnings. This portion is also untaxed. I am presuming these earnings relate to share price changes in underlying assets. So for example if ATM goes from $5.00 to $10.00 and they hold a lot of them that will boost their profit hugely and thus also give them a very small PE. Although the ATM PE is very high. Hope that helps. And if not go over the financials in the link provided.

Answers are in the notes, particularly Note 2.

[BlackPeter]

Thanks blackcap, I agree this seems right but that would then imply that the overall PE ration of the NZX 50 index was only 7 which it's supposed to be more like 24... I'm missing something.

As blackcap explained, they do capture capital gains (of their assets) as well as earnings of their assets and call it all "earnings".

If you own a share yourself, than you still might be pleased about any capital gain, but it would not be part of the earnings for this particular stock and it would not go into the PE calculation.

You are comparing apples with fruit baskets.

[SailorRob]

Guys, I have now got it! Thank-you very much makes complete sense now. I read somewhere that a good way to get an idea of a overall index PE was to look at the ratio of a fund that tracks it, and this may well be the case in the states but not with Smartshares.

Cheers

[voltage]

I am still confused with this. Simplicity and Smartshares offer NZ top 50 funds. Simplicity has a management fee of 0.1% cf 0.5% for smart shares. But the funds use different indices. Smartshares use the portfolio index which limits any company to 5% of total holding. Which would you recommend?