Welcome to your May update
Dear investor, welcome to the Lifestages Investment Funds Investor Update for May 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 March 2024.
| Fund Option | 1M | 1Y | 5Y pa |
| World Equity Portfolio | -3.29% | 18.09% | 9.89% |
| Australasian Equity Portfolio | -1.19% | 2.34% | 4.01% |
| Corporate Bond Portfolio | -0.58% | 4.05% | 0.32% |
| World Bond Portfolio | -1.07% | 2.19% | -0.28% |
Performance is shown after fees and before tax. For more information about how performance is calculated and more performance periods, click here.
Market update
April saw the first monthly negative return since October 2023, as the market finally started to take on board that interest rates are going to stay higher for longer. Inflation numbers are also starting to rise in several countries.
During the month there were several large company earnings announcements. Tesla’s CEO struck a deal with Chinese search and mapping group Baidu, a big step forward in rolling out the advanced driving package in China. The stock was up 16% overnight on this news. Alphabet’s (Google) annual earnings are now projected to rise 29% this year, leading to its price going up 9% for the month. Leading UK healthcare company Astrazeneca (+13%) also had a very good results announcement in April.
While the US market was down around 4% for April, other markets performed better. Our New Zealand shares were relatively flat for the month, with good results in healthcare companies, Fisher & Paykel Healthcare +11% and Ebos Group +2%, and the utilities sector, Meridian Energy +2% and Contact Energy 0.2%. Emerging markets were positive for the month, with the larger countries China up 4.4%, and India +3.8%, demonstrating the benefits of diversification within the Scheme.
The High Growth Fund unit price was down in April. Our two largest sector holdings, Information Technology and Healthcare, experienced bigger falls than sectors like Utilities, Consumer Staples and Communication Services.
The Income Fund unit price also fell during April, as not so positive news on inflation disseminated through the market. The Fund, however, was protected from some of those falls, as about 1/3 of the Fund’s holdings are in very short dated fixed interest securities (which aren’t as negatively impacted by rising interest rates).
The higher interest rates for longer view signals that returns from this Fund should be higher going forward. Yields are increasing, therefore regular coupon payments should be higher, leading to larger increases in the Fund’s unit price.