OneAnswer KiwiSaver Scheme Growth Fund

Performance is after the annual fund charge and before tax. Legal information and disclaimers.

• International share markets were mostly higher over the quarter. US shares outperformed, helped by the re-election of Donald Trump, whose business-friendly policies are seen as positive for local companies. The three major US share indices hit record highs before giving back some of their gains late in the quarter as the interest rate outlook became less promising. The S&P 500 Index was up 2.4% (in local currency terms), meaning it finished the year around 25% ahead of where it began. Technology stocks were again the standouts during the quarter, with the Nasdaq 100 Index up a solid 6.3%.
• 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 fund also has a modest exposure to international and New Zealand bonds, which were mostly lower despite many central banks cutting interest rates; ordinarily, this would be positive for this asset class. US bonds underperformed most other regions. The US Federal Reserve (the Fed) lowered interest rates twice – by 25 basis points in November and December. However, following its most recent meeting, it said that slower progress on inflation, strong growth and relatively stable unemployment translated to a slower pace of rate cuts ahead. Bond markets elsewhere also fell in value, but held up a bit better than in the US.
• New Zealand bonds finished the quarter modestly higher, one of the few regions that saw bond prices rise. The mild gains came on the back of the aggressive RBNZ rate cuts, as it reacted to weak economic data, including a 1.0% slump in Q3 growth (GDP), ongoing weakness in retail sales and a jump in the unemployment rate to 4.8%.
• Holding back relative returns over the quarter were our international equity holdings – namely an underweight to several large-cap technology and consumer discretionary companies that performed well. Company selection within our Australian share and international listed infrastructure holdings also hurt. This was partly offset by better company selection among our New Zealand share and international listed property holdings.
• Heading into the New Year, share market valuations appear stretched even after factoring in robust earnings growth and a slight pull-back in markets towards the end of December. The risk for bond markets is that central banks slow down the pace/extent of future rate cuts, given ongoing economic resilience and the risk of a resurgence in inflation – particularly in the US. For this reason, we await further clarity, which should come with more detail on Trump’s policies.

The fund aims to achieve (after the fund charge and before tax) over the long term high returns, allowing for large ups and downs in value.

The graph below shows the value of a $1,000 investment made at the time the fund launched.

Performance is after the annual fund charge and before tax. Legal information and disclaimers.

The fund invests mainly in growth assets (equities, listed property and listed infrastructure), with a small exposure to income assets (cash and cash equivalents and fixed interest). The fund may also invest in alternative assets.

This chart shows the mix of assets that the fund generally intends to invest in.