When it comes to investing, most of us focus on returns and how it will help us with our choices in retirement.  Our job as professionals is to assist you with strategies to achieve that. Your money is invested into many assets across New Zealand and the globe, providing you with diversification, spreading the risk around.  Have you ever wondered what your money is doing?
 
Within the portfolios that we recommend your money could be invested in Novo Nordisk, a healthcare company based in Denmark.  Nono Nordisk is working on drugs that provide medication to help people suffering from diabetes better process insulin.  To give you some idea of the impacts of diabetes, those with diabetes are 2-4x more likely to have a heart attack or stroke.  There are 483 million people with the disease globally and 50% of all adults with type 2 diabetes are undiagnosed.  Novo Nordisk have had some recent success in clinical trials for a weight loss drug reducing risk of death by 18%
 
You may be invested in Eli Lilly.  Eli Lilly is a health care company based in the US.  Eli Lilly has made significant scientific progress into a cure for Alzheimer’s.  While they are working on that they’re developing potential treatments and tools to help slow the disease progression.  In May 2023, Eli Lilly announced that a clinical trial of the drug Donanemab showed it could significantly slow the progress of cognitive decline, allowing patients to be independent for longer.
 
Locally, you could be invested in Zerojet.  Zerojet was established to develop electric propulsion systems to eliminate the need for combustion engines on small watercraft.  Xframe Pty, is a company that has created a recoverable and reusable framing system for the next generation of sustainable building construction.  Woolchemy, is another New Zealand example.  It is a material technology company, set up to transform wool onto something more valuable, using sustainable, environment and ethical processes.  For example, they have created a nappy that is healthier for babies and the planet.
 
Sunchaser is an avocado orchard located on Motiti Island 12 km off the shore from Papamoa.  The orchard has high fertile free draining soil and easy contour and a frost-free climate.  That, along with the natural separation from the mainland, provides a quarantine buffer from root rot fungus.
 
As you can see, your funds may not only be doing good things for your retirement.  You may own shares in companies (through your managed portfolio or Kiwsaver) that are also doing great things for society.  Some of these investments aren’t listed on any stock exchange, meaning the general public can’t invest in them directly.
 
As with any investment, there is risk.  It’s important to ensure that investments into companies mentioned above are right for you.  They need to match your tolerance for volatility, your investment timeframe and your capacity to take on risk.  For most people, investing in these companies will be in conjunction with a well-diversified portfolio with small allocations into each.
 
 
Investors joining first home buyers
 
The past four weeks have brought further evidence of developing strength in New Zealand’s residential real estate market. The monthly survey of mortgage brokers which I run with mortgages.co.nz has just shown that a net 31% are seeing more investors looking for advice. This is accompanied by a net 35% seeing more first home buyers seeking assistance.
 
With these numbers almost the same does that mean investors are now as active as young buyers? Probably not. Another of my monthly surveys which covers real estate agents shows that whereas a net 26% are seeing more investors a net 55% are seeing more first home buyers.
 
The key point to note however is that the 26% net proportion seeing more investors is up from 14% in late-September, 0% late-August, and a net 44% at the end of April seeing fewer investors.
 
The interest of investors in purchasing has been lifted by evidence of rising prices, anticipation of interest expense deductibility slowly returning, and quickly growing demand from people for rental accommodation.
 
The boom in net migration is placing upward pressure on rents in an environment where analysis of rental bonds lodged suggests in the past few years there has been no net growth in the stock of properties being rented out.
 
This then creates an incentive not just for people to purchase property as an investment, but young buyers to accelerate their plans for making their first purchase. They are being pressured by rising rents and will be aware of the extra demand now coming from investors with predictions of a lot more to come.
 
Six months from now when we have greater confidence about falling inflation and interest rates, plus still high population growth and falling growth in new house supply, the competition at auctions and open homes is likely to be considerably higher than is the case now.
 
For additional information on the economy, housing market, and interest rates, you can subscribe to Tony’s free weekly Tony’s View publication at www.tonyalexander.nz
 

 

Disclaimer: This newsletter is meant to be informative and engaging, hopefully not a cure for insomnia.  Please don't take this as personalised financial advice.  Discuss your situation with an Advisor.  This is where I need to say past returns are no guarantee of future returns.