Strong start continues for Milford’s PIE Funds

April 1

Milford’s three Portfolio Investment Entity (PIE) funds, which were launched on 1 October 2007 to take advantage of the new tax free capital gains regime, have had a strong start given difficult sharemarket conditions.

Since their inception the Milford Aggressive Fund has had a positive return of 4.4%, the Milford Peak Fund negative 8.1% and the Aon Kiwisaver Milford Aggressive Fund was also up 4.4%. This compares with an 18.9% decline in the NZX 50 Gross Index over the same six month period and an 18.3% fall in the NZX 50 Portfolio Index.

Milford’s PIE Funds – Performance Since Inception

Fund	Since Inception	Benchmark	NZX 50 Gross Index
Milford Aggressive Fund*	4.4%	5.0%	-18.9%
Milford Peak Fund	-8.1%	-18.3%	-18.9%
Aon KiwiSaver Milford Aggressive Fund^	4.4%	5.0%	-18.9%

*Returns are before tax and after all fees 
^Returns are before tax and after all investment management fees and before tax, administration, audit, legal and other such fees charged by AonSaver. 

The Aon Kiwisaver Milford Aggressive Fund invests into the Milford Aggressive Fund, with the latter being a unit trust.  It is likely to be one of the top performing KiwiSaver funds over the six month period, across all KiwiSaver product categories. 

The Aggressive Fund has an absolute return target of 10% per annum, which means that it should perform relatively better during difficult sharemarket conditions. The fund’s performance since 1 October is consistent with this objective.

The Aggressive Fund had the majority of its portfolio in cash throughout most of the six month period but performed well because a number of its investments had positive returns, including Abano Healthcare and New Zealand Oil & Gas.

The Milford Peak Fund is benchmarked against the NZX Portfolio Index and was invested in a wider range of New Zealand and Australian listed companies through the six month period. This fund will have a much stronger correlation with conventional sharemarket indices than the Aggressive Fund.

Although all three PIE funds have had an encouraging start it is important to note that they each have five year plus investment horizons and six months is obviously a very short time period in this context.

The immediate New Zealand sharemarket outlook is mixed due to a volatile offshore sharemarket environment and earnings outlook concerns from some New Zealand listed companies.  This is a challenging environment and places a premium on stock picking skills.  Therefore Milford will continue to look for special opportunities in order to outperform the funds’ respective benchmarks.
       
Anthony Quirk, 1 April 2008