Year in review: fund performance and market highlights

A key driver of the investment returns reported in your annual account statement is how the fund or funds you’re invested in performed. As you may have seen in the media, financial markets had a bit of a roller-coaster ride over the 12 months to 31 March 2025. The following sets out what happened over that time and how it’s contributed to the results you’ll see in your account statement.

It was a relatively good year for international share markets, with several markets rising to record highs, driven by ongoing optimism in the artificial intelligence (AI) space. 

However, late in the 12-month period, share markets – particularly those in the US – came under pressure as worries around the impact of President Donald Trump’s tariffs on growth and inflation grew.  

Fixed interest or bond markets had a relatively good year, with most international bond markets finishing in positive territory. Over the 12-month period, good progress was made on containing inflation, which prompted most global central banks to cut interest rates. When interest rates fall, bond prices generally rise. 

It was a challenging year for the New Zealand economy, which continued to underperform its global peers. Discretionary spending took a hit as households struggled with elevated mortgage rates. This saw the local economy fall into a recession, prompting the Reserve Bank of New Zealand (RBNZ) to cut interest rates.  The central bank cut interest rates four times, taking the Official Cash Rate (OCR) from 5.50% to 3.75%.

Against the backdrop of a sluggish 12 months for the economy, it was no surprise the NZX 50 Index ended lower – making it one of the weakest-performing share markets around the globe. 

On a good note, NZ bond markets delivered positive returns, benefiting from the interest rate cuts by the RBNZ. Moreover, the central bank signalled that more interest rate cuts lie ahead.  

Aided by the strong international share market performance discussed above, and positive returns for bonds, it was pleasing to see all diversified funds deliver positive returns over the period.

As we head into the next 12 months, investment markets are enduring a period of heightened volatility. Several share markets are lower as President Trump’s trade policies generate headwinds for growth, and the prospect of a pick-up in inflation is also posing risks.  

Despite this, your investments remain in good hands thanks to our dedicated team of investment specialists who continue to monitor and respond to these situations. Furthermore, we ensure our funds are well diversified to help manage the ups and downs investing can always bring.