OneAnswer KiwiSaver Scheme Australasian Share Fund

• New Zealand shares had a strong quarter, with the NZX 50 Index gaining 5.5%. The local share market was helped by two back-to-back, 50-basis-point cuts to the Official Cash Rate (OCR) from the Reserve Bank of New Zealand (RBNZ). These were seen as good for companies and households, as they lowered borrowing costs.
• The RBNZ delivered the cuts as inflation fell back to within its target range, and as a weaker economic backdrop saw the economy return to recession. Inflation, as measured by the Consumer Price Index, fell to an annual rate of 2.2% for the period to 30 September. Although prices are still rising, they’re doing so at a slower rate – giving the RBNZ confidence that inflation is coming under control. Meanwhile, growth, as measured by GDP, fell 1.0% in the third quarter. It followed a 1.1% slump in the previous quarter. These were the biggest quarterly falls since late 2021 – at the height of the Covid-19 pandemic and lockdowns.
• Other economic data remained mixed. Retail sales have now registered nine consecutive quarters of decline, while unemployment rose to 4.8% in the September quarter, up from 4.6% previously. However, December’s business outlook showed signs of improvement, with the “past own activity” measure showing a decent jump, suggesting demand may be recovering.
• Meanwhile, in Australia, the ASX 200 fell 0.8%, despite hitting an all-time high earlier in the quarter. Its market continued to take direction from its key trading partners and, with China’s economy weak (relative to its historical performance at least), it was little surprise to see the materials and energy sectors leading the Australian market lower.
• Having the biggest positive contribution to relative performance was the fund’s longstanding overweight in Contact Energy, whose shares were up over 16% to a three-year high. This was ahead of possible changes in a key global share market index – with Contact Energy looking likely to replace Mercury NZ in the MSCI World Index early in 2025. It meant that Contact Energy’s shares traded higher, while Mercury NZ (in which we have an underweight position) shares fell.
• Other positive contributors were the fund’s overweight positions in online travel booking company Serko, logistics company Freightways and campervan company Tourism Holdings. Serko was the second best performer on the NZX 50, up 29%. It handles corporate travel management and expenses and operates the Booking.com for Business platform. It announced an increase in revenue guidance and its intention to acquire a competing US business. Freightways shares were up 16%, as the company said its net profit after tax for the first quarter of its 2025 financial year was up 4.1% on the same period last year. Tourism Holdings saw its shares up 12% as the outlook for the rental division appears to be improving (although vehicle sales remain weak) and as investors have purchased shares following recent underperformance. 
• There were a few detractors from relative performance, mainly among the fund’s weaker-performing Australian holdings. That included positions in building materials company James Hardie Industries and real estate company Dexus. The fund’s holding in cancer diagnostics company, Pacific Edge, was also detrimental as shares in the company fell 16%. It posted a $14.5m after-tax loss for the six months to September 2024, and said it was still awaiting the outcomes of several events that had the potential to renew growth in the US for its Cxbladder test.

The fund invests mainly in New Zealand and Australian equities. Investments may include:

• Equities in companies that are listed or intend to list on the New Zealand or Australian stock exchanges
• Cash and cash equivalents.

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

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