OneAnswer KiwiSaver Scheme Australasian Share Fund

• New Zealand's share market experienced a significant downturn, with the NZX 50 Index dropping over 6%. This decline occurred despite the Reserve Bank of New Zealand cutting the Official Cash Rate by 50 basis points in February, marking the third consecutive cut of this magnitude. The central bank's efforts to stimulate the economy were overshadowed by negative sentiment from international markets and disappointing financial results from some local companies in the latest earnings season.
• Economic data presented a mixed picture. The unemployment rate increased to 5.1% from 4.8%, while GDP grew by 0.7% in the final quarter of 2024, driven by primary industries, retail trade, transport, and accommodation. This growth helped lift the economy out of recession. Meanwhile, inflation remained steady at 2.2% for the year.
• In Australia, the ASX 200 Index fell by over 2%, impacted by global market volatility and concerns over domestic economic growth. Its falls came despite the Reserve Bank of Australia finally beginning its rate-cutting cycle, as inflationary pressures fell back to within the central bank’s target range.
• Detracting from relative performance was the fund’s long-standing overweight positions in Australian building materials company James Hardie Industries and New Zealand retirement company Ryman Healthcare. James Hardie shares fell 23%, following news that it would acquire US building-products-makers AZEK in a cash and share deal worth $8.75 billion; investors felt the deal may be overvalued. Meanwhile, Ryman fell 35% following a trading update which accompanied news of a $1 billion capital raise. It announced a 40% slump in sales during the third quarter, compared with the previous two comparable periods.
• Another detractor was its underweight to A2 Milk, whose shares were up over 40% as the company’s results beat market expectations and as it declared its first ever dividend.
• It wasn’t all bad news. Offsetting some of the negatives were the fund’s overweight positions in infrastructure company Vector and seafood company Sanford. While Vector shares were up only 3%, it comfortably outperformed the market. Vector is a defensive company, providing essential services such as electricity and gas distribution, which tend to have stable demand regardless of economic conditions. Its shares held up well against the backdrop of steeper falls from the broader market. Sanford’s shares were up 19%.
• The fund also held an underweight position to medical products maker, Fisher & Paykel Healthcare. Its shares were down 12% as Donald Trump announced tariffs of 25% on all products imported from Mexico and Canada into the US. About 45% of the company’s respiratory products are made in Mexico, and in the first half of FY25, around 43% of the company’s revenue came from the US.

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.