Navigator Funds: Returns to 31 December 2020

These performance numbers are calculated by Hobson Wealth based on a blend of the performance of the underlying Hobson Wealth Investment Funds as applicable to each of the model portfolio allocations, the performance is gross of fees and tax. The performance information for each of the underlying Hobson Wealth Investment Funds can be obtained from the Quarterly Fund Updates for the Funds, which are available on www.iisolutions.co.nz and www.business.govt.nz/disclose Since inception performance is a cumulative measure from inception of the Funds, October 24th 2019.

As we are now in 2021, we believe the backdrop for investing remains supportive. Markets around the world have responded to record levels of fiscal and monetary stimulus, and despite few signs the pandemic is slowing, we expect the positive momentum for shares to continue.

The New Zealand share market finished the year in style, posting +2.5% for the month of December. The index crossed the 13,000 point mark for the first time, led by the electricity companies as global appetite for renewable energy investments saw foreign buyers continuing to increase their holdings. The retirement sector also recorded a strong month off the back of a remarkably buoyant housing market. Domestic economic data also continues to highlight the strength of the recovery from the lockdowns and lows of last year, while the NZ dollar continued to appreciate, particularly against the weakening US dollar, closing the year just shy of US$0.72.

Globally share markets continued to move higher in December but could not match the double-digit gains made in November. US equities, buoyed by the transition to Joe Biden, continued to march higher into year end. While European equities also gained sharply on the news of effective vaccines. The EU agreed a Brexit trade deal with the UK which officially left the union on 31 December 2020. UK equities performed well in the final quarter, reversing some of the underperformance that they suffered during the early stages of Covid. British stocks responded well to the Brexit trade deal, with domestically-focused companies outperforming.

Given the recovering economic backdrop, a global vaccine rollout, and supportive financial conditions, we believe the outlook for equities remains constructive. Cash on balance sheets is at record levels, and we expect to see more corporate activity this year including Mergers & Acquisitions, capital investment and the reinstatement of dividends.