NZ Fund Managers

[Snoopy]

Bare numbers summarized over a difficult property year:

	30-06-2023 Year Return	add back Fees and Taxes	equals Underlying Return
ANZ Oneanswer NZ Property	-1.23%	-1.10%	-0.13%
Harbour Real Estate Fund	1.61%	-0.78%	2.39%
Smartshares NZ Property ETF	-1.31%	-0.54%	-0.77%

How did Harbour Asset Management top our little table? Rather than being particularly great at picking winners, it looks like Harbour were significantly underweight in three of the biggest losers, being 'Vital Healthcare Property', 'Stride Property Group' and 'Investore'.
1a/ For VHP: capital saved was 14.0%-12.8% = 1.2 percentage points, or 1.2/14.8= 8.1% of a hypothetical index invested total.
0.081 x 14.0% x a 13.2 capital value percentage loss = 0.15 percentage points of portfolio capital loss saved
1b/ For SPG: capital saved was 6.92%-5.42% = 1.5 percentage points, or 1.5/6.92= 22% of a hypothetical index invested total.
0.22 x 6.92% x a 15.7 capital value percentage loss = 0.24 percentage points of portfolio capital loss saved
1c/ For IPL: capital saved was 'at least'(*) 4.51%-2.72% = 1.79 percentage points or 1.79/4.51 = 40% of a hypothetical index invested total.
0.4 x 4.51% x an 11.9 capital value percentage loss = 0.21 percentage points of portfolio capital loss saved.

(*) The actual holding in Investore at the latest reference date is not disclosed. However we do know that it is a smaller position than the number 10 holding on the top ten list of investments.

Furthermore Harbour adjusted for the aforementioned 'underweightings' by overweight in one of the smallest losers - Argosy.


Was it the 'plus' bit of the 'index plus' strategy that helped?
2a/ Broadening the definition of 'real estate' to include 'retirement villages' certainly did not help. Ryman was down 26.1% for the year and Oceania was down 17.2%, although Summerset was basically steady (a loss of 0.1%).
2b/ Holding Infratil certainly helped with the head share up a massive 32% in the year under consideration. Albeit we have to remember Infratil made up a scant 2.72% of the Harbour Asset portfolio at years end for a gain of 2.72%-2.06%= 0.66 portfolio percentage points added to total return. (R x 1.32=2.72% => R= 2.06%).
2c/ Holding a stake the Australian listed 'Goodman Group' (a 3% holding at 30-06-2023) while its share price rose from $A17.84/0.9048=$NZ19.72 to $A20.07/0.9165=$NZ21.90, a rise of 11% was positive. This added 3.0%-.2.7%=0.3 percentage points to the overall portfolio total (R x 1.11 = 3.00% => R= 2.70%)

Adding up the savings of holding underweight positions in the biggest losers of the real estate investment index, coupled with the winnings from picking a couple of quasi property companies that sit out side the index, the total portfolio advantage to 'Harbour Asset Management' stretches out as follows:
(0.15%+0.24%+0.21%)+(0.66%+0.3%)= 1.56%

However, the actual 'winning margin' for Harbour over the Smartshares NPF fund was: 2.39%--0.77% = 3.16%.. Why the difference?

SNOOPY