OneAnswer KiwiSaver Scheme Australasian Property Fund

• The New Zealand listed property sector had a particularly strong quarter, benefiting from lower bond yields, while a drop in the rate of inflation also supported the interest-rate-sensitive sector. The property sector outperformed the broader New Zealand share market as the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 25 basis points in August, its first rate cut since 2020. 
• Rate cuts came as economic data showed the local economy continues to struggle. The weak economic data included a 1.2% decline in second-quarter retail sales, while unemployment rose to 4.6%, the highest level in more than three years. Meanwhile, economic growth – as measured by Gross Domestic Product (GDP) – contracted by 0.2% in the three months to June 2024.
• By the end of the quarter, interest rate markets were pricing in more than 200 basis points of cuts from the RBNZ over the coming 12 months, while the yield on the New Zealand 10-year government bond was 43 basis points lower at 4.24%.
• Benefiting the fund’s relative performance during the quarter was its overweight position to the strong-performing retirement sector. The best of the bunch was Arvida Group, whose shares rose more than 70% following a $1.3 billion takeover offer by US private equity firm, Stonepeak. The offer of $1.70 a share was a 65% premium to Arvida’s closing price prior to the announcement. Subsequently, shareholders voted overwhelmingly in favour of the takeover offer.
• The Arvida news pushed the share prices of three other retirement sector companies higher, including Oceania Healthcare (+39%), Ryman Healthcare (+20%) and Summerset Group Holdings (+24%). Also benefiting the retirement sector’s performance was the decline in interest rates. Lower interest rates support a more buoyant housing market, which allows prospective buyers of retirement units to sell their existing home to fund the purchase.
• Other contributors to the fund’s relative performance was its overweight position to Stride Property Group and its underweight positions in Argosy Property and Goodman Property Trust. Stride saw its shares rise almost 20%, and, as this is the fund’s largest overweight position, this was of benefit to performance. Although Argosy and Goodman’s share prices rose by 4% and 3% respectively, they both underperformed the property sector.

The fund invests mainly in New Zealand and Australian listed property assets. Investments may include:

• Companies, funds or trusts that invest in property and are listed or intend to list
• Cash and cash equivalents.

This chart shows the mix of assets that the fund generally intends to invest in – 100% listed property.

See the fund's actual investment mix on page 3 of the fund update.