OneAnswer KiwiSaver Scheme International Share Fund

• Global share markets were mostly higher during the quarter, helped in part by interest rate cuts from several central banks, including the US Federal Reserve (the Fed) and the European Central Bank.
• In the US, the S&P 500 rose 5.9%, while the Nasdaq 100 added 2.8% – both reached record highs during the quarter (all indices in local currency terms). Meanwhile, the Dow Jones Industrial Average was the best-performing of the major US indices, ending the quarter up more than 8%. At a sector level, real estate was a strong performer, benefiting from lower bond yields, while utilities and consumer discretionary also outperformed. The energy sector ended the quarter lower, weighed down by falling oil prices.
• European share markets were also mostly higher, but gains were more muted. The Euro Stoxx 50 recovered from an August sell-off to end the quarter up 2.4%, while the FTSE 100 was 0.9% higher.
• Asian markets made a strong comeback late in the quarter after the People’s Bank of China announced a stimulus package to help alleviate deflationary concerns and shore up its flailing property market. The package included interest rate cuts and a reduction in the reserve requirement ratio – the amount of cash banks must hold as reserves – which should free up about 1 trillion yuan for lending. By the end of the quarter, the Shanghai Composite was up 14.3%.
• Contributing positively to fund performance were underweight positions to tech giants Microsoft, Alphabet, and Nvidia, with all three ending the quarter lower, after a stellar run this year.
• The fund’s holding of Danish transport and logistics company, DSV, also contributed to performance, with its shares finishing the quarter up nearly 30%. The rally came after reports the company had agreed to purchase Schenker, the rail logistics arm of Germany’s state-owned railway, Deutsche Bahn. The deal, worth €14.3 billion, would make DSV one of the world’s largest logistics companies.
• Also benefiting performance was the fund’s long-standing holding of MercadoLibre, the South American e-commerce company. Its shares rose to an all-time high after the company reported second-quarter revenue growth of 42% to US$5.1 billion, comfortably ahead of estimates. Furthermore, the company saw a jump in monthly active users, surpassing 50 million.
• Offsetting some gains were underweight positions to Apple and Tesla, as shares in the two companies ended the quarter higher. Tesla shares were particularly strong, finishing up more than 20% after it announced second quarter vehicle production and deliveries had topped expectations. Deliveries are a close estimation of vehicle sales that Tesla discloses and were nearly 15% higher than the first quarter.

The fund invests mainly in international equities. Investments may include:

• Equities in companies that are listed or are soon to be listed on a stock exchange
  
• 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.