Subj : Tesla's falling share price hits KiwiSaver accounts
To   : All
From : News
Date : Tue May 21 2024 12:44 pm

Tesla's falling share price has hit KiwiSaver's lowest-performing fund's
returns.


KiwiSaver provider Koura both topped recent Morningstar data, with a 150.4%
return over 12 months in its cryptocurrency fund, and bottom of the ranks,
with a 29.9% fall in its clean energy fund.


The crypto fund has been outperforming for the past year on the back of
strong overall cryptocurrency performance.


Koura founder Rupert Carlyon said because investors were limited on how much
of their portfolio could be invested in the crypto fund, he was not worried
about what might happen when that strong run came to an end.

"People are desperate for it and we can give it to them in a safe way. who
knows what's going to happen next?"


He said the clean energy fund was at the other end of the table because of
sector challenges. It had a significant investment in Tesla, which has had
its share price fall about 75% from the peak.


Shares traded for US$407.36 in November 2021, but were at US$177.46 this week.


"That's a big one. Clean energy as a theme is going through some tough times.
particularly with the prospect of a Donald Trump election, that's weighing on
a lot of investors' minds."


He said because a lot of battery and solar technology was now coming from
China, the US' application of increased tariffs would be a win for the sector
in that country.

The industry was clearly a bit frothy previously and that has unwound,"
Carlyon said.


"What we have seen with the US stock market is that good stuff that is
profitable and delivering good outcomes for investors has recovered well, and
stuff that's slightly more marginal is struggling - smaller, early-stage
companies are struggling a bit.


"That's why the recovery hasn't quite happened."


He said the motivation to invest in the sector had not changed.


"We do have to figure out a way to decarbonise the economy and make all the
stuff work. There will be winners in this space."


Greg Bunkall, data director at Morningstar, said the past year had been
"brutal" for renewable energy stocks.

"Unlike established companies in other sectors, this industry is dominated by
younger firms and projects. These firms rely heavily on debt financing for
new projects and product development. With rising interest rates, securing
funding has become significantly more challenging, hindering growth, and
impacting stock prices.


"Despite the current pessimism, there are reasons for optimism.


"Government policies around the world are increasingly mandating a larger
share of energy to come from renewables. Additionally, the global push for
cleaner energy continues to drive investment towards renewable energy
solutions.


"In essence, while the short-term outlook might be bumpy due to funding
constraints, the long-term prospects for renewable energy remain strong."


He said the Koura clean energy fund's performance had been weak through the
start of the year, and April also presented difficulties.

"It's important to note that the Koura Fund is unhedged. This means the
fund's performance is also directly tied to fluctuations in the New Zealand
dollar compared to the US dollar. Movements in the exchange rate can
therefore impact the fund's value."


By Susan Edmunds of rnz.co.nz

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