Welcome to your February update
Dear investor, welcome to the SBS Wealth Investment Funds Investor Update for February 2024. Below you will find the latest performance data and market commentary from your SBS Wealth Investment Management Team.
Performance data
Performance as at 31 January 2025.
| Strategy | 1M | 3M | 6M |
| High Growth Strategy |
2.45% |
7.71% |
8.77% |
| Growth Strategy |
1.99% |
6.31% |
7.32% |
| Balanced Strategy |
1.54% |
4.91% |
5.88% |
| Conservative Strategy |
0.85% |
2.80% |
3.70% |
| Portfolio | 1M | 1Y | 5Y pa |
| World Equity Portfolio |
2.98% |
25.83% |
11.83% |
| Australasian Equity Portfolio |
0.84% |
10.77% |
3.39% |
| World Bond Portfolio |
0.29% |
3.32% |
-0.21% |
| New Zealand Bond Portfolio* |
-0.03% |
6.82% |
1.00% |
* Previously Corporate Bond Portfolio
Performance is shown after fees and before tax. For more information about how performance is calculated and more performance periods, click here.
Market update
2025 has kicked off with good returns across key global equity markets in January, despite some turbulence from new tariff announcements, interest rate uncertainties, and developments in the artificial intelligence space. The emergence of a Chinese AI startup (DeepSeek) and its low-cost AI reasoning model also had ripple effects through the technology sector. However, broad optimism remains the case due to continued strength in the US economy and heightened business and consumer confidence following the US elections in November. Strong US economic data showing a resilient labour market and robust service sector activity led to rise in bond yields and tempered expectations of Federal Reserve rate cuts. Yet the S&P 500 managed to produce 1.9% during January on a total return basis.
At home in NZ the economic outlook is slightly more optimistic following the release of the inflation number for the fourth quarter, stabilising at 2.2% year-on-year. Yet performance in the sharemarket is still muted, with the NZX 50 down –0.9% for the month. Our preference to hold a higher weighting to Australian shares helped to mitigate this impact however, as the ASX 200 roared back into life returning 4.3% for the month, the best month for the index since January of 2023. The performance of the Australian market was largely driven by increasing anticipation of RBA rate cuts amidst cooling inflation and outperformance in the financial and consumer discretionary sectors.
We saw a divergence in sector performance in the US with information technology beaten down (-3.8%), while communication services continued to run (+8.1%). Despite the drawdown in IT stocks, there was broad participation across all other sectors with the top performers following comms as follows: healthcare (+5.8%), financials (+5.6%), and materials (+4.1%).
The World Equity Portfolio returned a solid 2.98% for the month, despite continued weakness in the NZD versus the USD (although there was no major change in the FX rate during the month). The standout performers for individual international stocks were Meta (+16.6%), Thermo Fisher Scientific (+13.9%), and JPMorgan Chase (+11.0%). Stocks linked to AI lost some value in January as market participants reconsider key buildout costs – Nvidia (-11.4%), and Apple (-6.6%) in particular.
The Australasian Equity Portfolio returned 0.84% in January driven by a mixed bag in terms of sector performance. Gains largely came from consumer discretionary (+7.0%) and financials (+5.9%). REITs did well amidst the changing interest rate narrative (+4.5%) while utilities (-2.6%) and comms (-1.7%) lagged. Top performers out of the direct holdings were QBE Insurance (+8.9%), Xero (+8.6%), and Macquarie (+8.5%). Domestically, Ebos Group stood out (+8%), followed by Precinct Properties (+4.2%).
The World Bond Portfolio came in with a modest 0.29% return as US Treasury yields fluctuated throughout the month, rising around 20 basis points in the first half of the month, driven by expectations of fiscal expansion under the new administration. However, yields fell later in the month as much weaker than expected inflation data shone through. Global investment grade corporate bonds returned around 0.6% in January, while US high yield gained 1.4%. This performance was supported by tightening credit spreads ad robust investor demand.
The New Zealand Bond Portfolio was flat (-0.03%) as after a significant rally in 2024, NZ government bonds faced a downturn in January as yields on short term notes and longer-term bonds rose. The corporate bond market saw limited issuance in January and spreads between corporate and government bonds remain tight.
Strategies with higher weightings to the equity portfolios performed better than those with a higher weight to the bond portfolios.