Welcome to your April update
Dear member, welcome to the Lifestages KiwiSaver Scheme Investor Update for April 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 |
| High Growth Fund | 3.86% | 22.08% | 9.15% |
| Auto 0-49 Option | 3.86% | 22.08% | 9.15% |
| Auto 50-54 Option | 3.25% | 18.34% | 7.54% |
| Auto 55-59 Option | 2.65% | 14.64% | 5.85% |
| Auto 60-64 Option | 2.05% | 11.02% | 4.13% |
| Auto 65+ Option | 1.75% | 9.25% | 3.02% |
| Income Fund | 0.84% | 4.04% | 0.62% |
The Lifestages Auto Options invest in combinations of the Lifestages High Growth Fund and the Lifestages 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.
For more information about how performance is calculated and more performance periods, click here.
Market Update
Patient investors who stuck to the plan, and remained invested in the more aggressive risk profiles, were rewarded over the last three months.
2024 got off to a roaring start. Global share markets provided great gains during the first quarter of 2024 – particularly the US (+16% in NZD terms), after shaking off concerns of a recession that had become embedded in the narrative earlier in 2023. Fixed interest followed a bumpy road as rate cut expectations were tempered.
The market rally was driven by the wider Information Technology, particularly semi-conductors (e.g. Nvidia +93%, ASML +36%), Communication Services (Meta +45%, Disney +43%), and Consumer Discretionary (Toyota +45%) sectors. In contrast, several of the defensive sectors – Utilities, Energy, and Consumer Staples, performed less well. This impacted on the New Zealand market, (up 3% ytd) and several other Asian/Pacific markets.
Reaccelerating inflation data during the quarter led Bond yields to rise in January (from the December low of 3.8%) and end March at 4.2%. Despite rising yields on Bonds (which leads to a temporary reduction in the value of the Bonds), the Income Fund still managed to return 0.41% for the March quarter.
Inflation remains sticky, albeit trends have improved globally, and markets are pricing central bank rate cuts in for the second half of the year. The equity markets look markedly better than six months ago. The US outlook has improved, with risks of a recession receding, however, growth looks to be slowing with manufacturing jobs declining. Services jobs appear to be holding up well in contrast, which is helping to negate a slowdown.
We remain aware of the risks. We favour high quality US equities that fit into our key investment themes for the long term, such as digitalisation and innovative healthcare. We also factor in Environmental Social Governance (ESG) considerations like carbon intensity and fossil fuel involvement. We also favour shorter term fixed interest to help protect investors' capital.
The Magnificent 7 stocks (Apple, Google, Microsoft, Tesla, Nvidia, Meta, and Amazon) are capturing a greater weight of major stock indices. While these stocks are among our core holdings, the funds are well-diversified among sectors and our long-term investment themes to manage concentration risk. As active managers, we have greater control of such risks compared to passive managers, who are forced to trade in line with their benchmark index.
