New Zealand Equity Advanced Beta Fund

HARBOUR NZ EQUITY ADVANCED BETA FUND
Fund Fact Sheet, 31 December 2014
Investment Objective
About Harbour
The investment objective of the Fund is to outperform the NZ Portfolio Index including imputation
credits (the “benchmark”) over the medium term through tilts to empirically proven success
factors.
Fund Outline
The Fund provides broad market exposure to New Zealand equities by tracking the benchmark,
with active tilts to quantitatively generated success factors that have empirically delivered
outperformance versus a passive benchmark over time. These success factors relate to growth,
yield and valuation. They are implemented with a liquidity overlay. Securities lending is also
permitted.
Benchmark
Harbour is a well-resourced New Zealand based
investment manager with extensive professional
investment experience managing funds for large
government
institutions,
corporate
superannuation funds, charities, Kiwisaver
Schemes and retail investors through mezzanine
platforms.
Proven Performance
The combination of an experienced team,
managing money within a well researched robust
and disciplined investment process, over time
helps us deliver favourable investment outcomes
for our clients.
Experienced Team
Harbour offers a team of experienced and
proven investment practitioners that have
extensive experience in managing money in
global and Australasian markets.
The NZ Portfolio Index including imputation credits.
Investment limits
Cash
0 - 5%
New Zealand equities
95 -100%
Sound investment process
The years of experience and lessons learned
over many market cycles has helped Harbour
craft a robust and disciplined investment process
for equities and fixed interest securities.
Investment Style
The Fund tracks the benchmark with tilts based on success factors. The Fund provides broad
market exposure to New Zealand equities with tracking error under 2% on an ex ante basis. The
Fund seeks to provide a core 70% benchmark tracking exposure with a 30% weighting to an
equally weighted exposure to growth, yield and valuation success factors. Success factor tilts
have empirical and academic support and are relevant to the unique New Zealand equity market.
In simulations our success factors have outperformed with strong statistical and economic
significance. We have conducted comprehensive simulation, risk analysis, and back testing of the
factors over a period of more than a decade.
The Fund has the ability to implement stock lending. Stock lending involves the transfer of legal
title and beneficial interest in securities to a third party borrower, in some cases against collateral
security, and in other cases with other appropriate risk mitigation arrangements.
Governance & Controls
The Harbour business operates within a
framework of strong governance that is overseen
by an experienced Board which includes two
independent directors.
Portfolio Managers for this Fund
Craig Stent
Director, Portfolio Manager
Investor Suitability
This Fund invests in New Zealand equities and therefore total returns may be volatile. This Fund
may be suitable for investors with a long-term investment horizon and who are prepared to accept
market volatility of a predominately passive investment approach.
Susanna Lee
Investment Analyst
In making investment decisions it is important that retail investors seek and obtain any investment
advice they require from their usual investment advisor.
Performance to 31 December 2014*
Month
Fund**
1.36%
NZ Portfolio Index
0.90%
Fund Manager of the Year, NZ
Fund Manager of the Year; Fixed Interest category, NZ
Fund Manager of the Year; Domestic Equities category, NZ
* The inception date of the retail NZ Equity Advanced Beta Fund
is 3 December 2014. Returns are before tax and excluding fees.
Returns include imputation credits.
Retail returns (after fees) can be found on our website (click here)
Harbour NZ Equity Advanced Beta Fund
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Fund Fact Sheet, December 2014
Top 10 Holdings
Absolute Sector Weights
Fund Facts - 31 December 2014
New Zealand Weight:
Cash:
Utilities
Health Care
Industrials
Consumer Discretionary
Property
Financials
Materials
Telecommunication …
Energy
Consumer Staples
Information Technology
Cash
Fisher & Paykel Healthcare C
Sky Network Television Ltd
Auckland Intl Airport Ltd
Meridian Ener-Partly Paid Sh
Contact Energy Ltd
Air New Zealand Ltd
Ryman Healthcare Ltd
Mighty River Power
Spark New Zealand Ltd
Skycity Entertainment Group
0.0
5.0
0.0
% Portfolio
5.0
10.0
99.5%
0.5%
15.0
% Portfolio
Current Strategy Comment
The NZX Portfolio Index returned 0.9% in December, with better than expected regulatory outcomes and positive operating
updates offsetting mixed retail sector earnings announcements.
The “Yield” factor was mildly positive for December. Tower was the top performer up 8% in December, as the market digested
2014 full year results to September, released late in November.
The best performing success factor was “Growth”. Chorus was the top performer and rose 29% after the Commerce Commission
announced a higher than expected draft decision on regulated prices for unbundled copper local loop and unbundled bit stream
access. The second largest out-performer was F&P Healthcare with the stock rising 15% after stock broker research highlighted
FPH’s strong respiratory health business and USD exposure. This strategy also held Tower which finished up 8% for the month.
The “Value” factor was a negative contributor to performance over the month. The portfolio position in Kathmandu was negative
for performance. The stock fell 28% after announcing that pre-Christmas sales and profit margins were below expectations, and
that challenging Australian conditions may require a change in strategy. Guinness Peat Group received a warning from the UK
regulator that sponsoring employers of the Coats Plan were insufficiently resourced and that it may be reasonable for it to issue
a Financial Support Direction in relation to the Coats Plan. GPG do not accept that the warning notice is reasonable and will be
vigorously defending their position.
Major movers on our passive position, which are natural under-weights were a2 Milk and Sky TV. Although a2 Milk had no
announcements in December, the stock fell 8%, reflecting the strengthening NZD/AUD cross-rate and institutional portfoliorebalancing. Sky TV fell 7% as the risk of new entrants and viewer fragmentation weighed on investor confidence.
The portfolio returned 1.36% since inception (3 December 2014), leading the NZX Portfolio Index with imputation credits which
rose by 0.90% over that period.
Fund details
Currency: New Zealand dollars
Portfolio Investment Entity Registered: Yes
Management fee: 0.52% pa management fee (includes investment
Unit pricing: Daily
management fee and fund administration) plus 0.02% to cover legal and
Unit price for Retail Fund as at 31 December 2014: 1.0131
audit.
Investment objective: The investment objective of the Fund is to outperform
Performance fee: No
the NZ Portfolio Index including imputation credits (the “benchmark”) over the
medium term through tilts to empirically proven success factors.
Entry/Exit fees: No
Investment guidelines: 95-100% New Zealand equities; 0-5% cash.
Distribution policy: Intention not to make distributions.
Harbour NZ Equity Advanced Beta Fund
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Fund Fact Sheet, December 2014
Disclaimer
This Fund Fact Sheet is provided in good faith for general information purposes only .Information including any analysis, opinions or views
contained herein reflects a judgement at the date of publication and is subject to change without notice. The information and any analysis, opinions
or views made or referred to do not constitute specific advice (whether of an investment, legal, tax, accounting or other nature) or a
recommendation to any person and may not be suitable for all investors. Investment in the Harbour Australasian Equity Focus Fund can only be
made using the Investment Statement. No person guarantees repayment of any capital or payment of any returns on capital invested in the fund.
Actual performance will be affected by fund charges. Past performance is not indicative of future results, and no representation or warranty,
express or implied, is made regarding future performance. To the maximum extent permitted by law, no liability or responsibility is accepted for
any loss or damage, direct or consequential, arising from or in connection with this publication.
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Harbour NZ Equity Advanced Beta Fund
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Fund Fact Sheet, December 2014

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