Welcome to your March update

Dear member, welcome to the SBS Wealth KiwiSaver Scheme Investor Update for March 2025. Below you will find the latest performance data and market commentary from your SBS Wealth Investment Management Team. 

Performance data  

Performance as at 28 February 2025. 

The Lifestages Auto Options invest in combinations of the SBS Wealth High Growth Fund and the SBS Wealth Income Fund in proportions that vary in accordance with pre-selected age bands. These options automatically adjust the risk profile of your investment by altering the proportions invested in the funds based on your age. 

Performance is shown after fees and before tax. For more information about how performance is calculated and more performance periods, click here. 

Market Update

February saw an increase in market uncertainty, especially in the US. Market participants digested further tariff “guidance” out of the US and reciprocal tariffs from the like of Canada, Mexico and China. Geopolitical developments weighed on markets and declines in consumer spending in the US also spread concerns of slowing economic growth and the feed through to corporate profits in future. As a result, the key US market barometer, the S&P 500 returned a slightly negative result for the month –1.42% (reduces to -0.54% when converted back to NZ dollars). Elsewhere, we saw Eurozone share prices rise in February, led by the financial services sector, while the Japanese sharemarket declined, particularly in large-cap technology and exporter sectors. On the positive side market darling Nvidia posted strong earnings results during the month, although it wasn’t taken that well by the market.

We saw allocations increase to less riskier assets, causing yields to drop. US Treasuries benefited from these falling bond yields as markets continued to price in new information around the performance of the US economy and the potential for a ceasefire in Ukraine. This was positive particularly for the highest quality bonds, with global fixed interest delivering a return of +1.18%.

Domestically, the Reserve Bank cut to the Official Cash Rate (OCR) by an additional 0.5%, its third consecutive rate cut, to 3.75%. This was good news for the domestic fixed interest market, up +0.59% for the month. However, the NZ economy continues to face headwinds. Continuing weakness in the Chinese economy and commodity price volatility have taken their toll on exports alongside a subdued housing market and growing unemployment. The New Zealand dollar remained low versus the US dollar impacting on the effect of our currency hedging positions (where international performance is converted into NZD). Ultimately, the NZX 50 ended the month down 3% on a total return basis. The Reserve Bank of Australia implemented a long-awaited interest rate cut for the first time this cycle, aiming to stimulate economic activity as wage growth declined implying downward pressure on domestic demand and corporate earnings in future. The ASX 200 faced notable fluctuations throughout the month, reaching an all-time high before ultimately ending the month in negative territory (-3.2% on a total return basis).

Within the Scheme, the Income Fund benefited from falling bond yields, returning +0.79%, while High Growth Fund felt the impact of domestic economy headwinds and US softer economic data, falling 1.9%. The more conservative Lifestages Auto profiles managed to avoid the majority of the sharemarket volatility, continuing to provide a positive return for the last quarter and close to ten per cent for twelve months. The more aggressive Lifestages Auto profiles fell between 1-2% for the month. However, they remain around 15% up for the last twelve months and positioned for large term growth from our long-term investment themes.

Some of the top performing themes and stocks in the portfolios for February were the healthcare sector (Eli Lily +14.7%, AstraZeneca +10.2%, and Johnson & Johnson +10.3%), along with Sony +12.7%, Telstra +7.8%, Port of Tauranga +5.4%, QBE Insurance and Freightways +4%.  Tesla performance struggled for the month, while Alphabet (Google) and UnitedHealth Group were down –15.8% and –11.7% respectively, and closer to home the laggards were Goodman Group -13.6%, Fortescue -10.6%, and Xero -6.3% (after several month of very good performance).