OneAnswer KiwiSaver Scheme International Share Fund

• It was a volatile start to the year for global share markets, driven largely by President Donald Trump’s trade policy announcements. Initially, several US share markets traded to record highs, but a weak March saw them end the period lower. The decline in the US was led by the so-called ‘Magnificent 7’ stocks, which as a collective declined by close to 15%. The S&P 500 Index fell 4.3% (all returns in local currency terms) and the Nasdaq 100 Index dropped 10.3%.
• The market was weighed down by the uncertainty surrounding US trade policies, which included new tariffs on imports from China, on-again/off-again tariffs on Mexico and Canada, and the threat of retaliatory tariffs on many of its trading partners. Meanwhile, economic data showed mixed signals, with inflation remaining elevated at 2.8% in February, and GDP growth estimates being revised downwards.
• European equity markets showed resilience, however, with the Euro Stoxx 50 Index up a solid 7.5% and the UK’s FTSE 100 Index gaining 6.1%. Both markets saw some robust earnings announcements from key constituents, while also continuing to benefit from supportive monetary policy conditions given interest rate cuts from both central banks. In Asia, Japan’s Nikkei 225 Index was down 9.9% on worries about US tariffs and their economic implications, while China’s Shanghai Composite Index fell only 0.2%.
• Holding back relative performance was weak company selection in the industrials and healthcare sectors. In industrials, the fund does not hold GE Aerospace, Siemens Aktiengesellschaft or Rheinmetall, as these companies do not meet our responsible investing criteria. They all saw solid gains as European defence stocks had a stellar quarter, given ongoing geopolitical uncertainties. In healthcare, the fund was overweight pharmaceutical company Daiichi Sankyo and Charles River Laboratories, both of which saw share price declines on the back of regulatory setbacks and disappointing financial performance.
• The fund also held an underweight position to the strong-performing energy sector. While it held Equinor ASA, Shell and Cheniere Energy – all of which did well – it did not hold market heavyweights Exxon Mobil, Chevron and BP, and this ultimately held back returns.
• It wasn’t all bad news. Contributing positively to relative performance was an underweight position to the weak-performing information technology and consumer discretionary sectors, where the Magnificent 7 stocks have a strong representation. The fund held below-benchmark positions to Nvidia, Apple, Broadcom and Microsoft, all of which experienced sizeable declines in their share prices. The fund was also underweight to Tesla, whose shares fell 34% as owner Elon Musk has been involved in political work alongside President Trump. 
• Elsewhere, the fund was underweight to ecommerce giant Amazon.com, but overweight to its South American competitor MercardoLibre. Shares in Amazon fell 10%, while those in MercardoLibre rose 20% on the back of strong financial performance and expansion plans.

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.