Investor update

SBS Wealth Investment Funds - March 2025

Welcome to your March update

Dear investor, welcome to the SBS Wealth Investment Funds Investor Update for March 2024. 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.

Strategy	1M	3M	6M
High Growth Strategy	-1.94%	0.92%	7.61%
Growth Strategy	-1.39%	0.89%	6.40%
Balanced Strategy	-0.85%	0.86%	5.18%
Conservative Strategy	-0.05%	0.77%	3.32%

Portfolio	1M	1Y	5Y pa
World Equity Portfolio	-1.24	18.10%	13.00%
Australasian Equity Portfolio	-4.02%	6.72%	3.92%
World Bond Portfolio	0.93%	4.75%	-0.08%
New Zealand Bond Portfolio*	0.52%	7.44%	0.95%

* 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

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 Funds, the World Bond Portfolio benefited from falling bond yields, returning +0.93%, and the New Zealand Bond Portfolio benefited from the third consecutive OCR cut returning +0.52%.

The Australasian Equity Portfolio felt the impact of domestic economy headwinds, falling –4.02% in February. Sector performance was lacklustre, with only Communications Services, Utilities, and Consumer Staples providing positive contributions to the overall ASX 200. The standout performers for the Australian directs were Telstra +7.8% and QBE Insurance +3.42%, while the laggards were Goodman Group -13.6%, Fortescue -10.6%, and Xero -6.3% (after several month of very good performance). Domestically, the NZ directs that stood out were Port of Tauranga (+5.4%) and Freightways (+3.9%).

The World Equity Portfolio suffered from softer US economic data, falling -1.24%. 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%. Tesla performance struggled for the month, while Alphabet (Google) and UnitedHealth Group were down –15.8% and –11.7% respectively. Sector wise, Consumer Staples led the pack +6.6% (which is well represented in the portfolio) followed by Real Estate +5.15% and Energy +4.9%. Consumer Discretionary -8.6% and Communication Services -5.45% lagged while IT was flat overall.