Welcome to your October update

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

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Performance data  

Performance as at 30 September 2025. 

The Lifestages Auto Options invest in combinations of the SBS Wealth Focused Growth Fund, the SBS Wealth High Growth Fund, the SBS Wealth Income Fund, and the SBS Wealth Cash 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

What happened in the markets

The last quarter was a strong one for the Scheme, especially those members in the funds/profile with a high allocation to equities. Those members that have remained invested in growth assets, through the High Growth Fund or the new Focused Growth Fund, have recovered from early year wobbles around Liberation Day, are now seeing their retirement account go up close to 10% for 2025.

The strong gains in equities have been driven by robust artificial intelligence and technology demand, solid corporate earnings, and a well-anticipated Federal Reserve (Fed) rate cut. A weaker US dollar also supported emerging markets. Credit and fixed income, particularly in New Zealand, also performed well. The US & UK technology and communication services sectors (AI Boom), European financials and healthcare sectors (strong corporate earnings), and UK materials (higher gold prices) were the leading sectors for the strong equity market returns in Q3. The Japanese equity market advanced strongly with cyclical sectors and semiconductor related stocks benefiting from global AI demand, higher commodity prices, and robust corporate results.

Emerging Markets were the strongest performing region in Q3. This was driven by the index heavyweights China (US-China trade talks progressing and continued focus on their anti-involution policy), Taiwan (against a backdrop of ongoing strength in technology stocks and continued demand for artificial intelligence), and Korea (similar to Taiwan).

The markets are optimistic that further rate cuts by the Fed will occur in coming months, before year end.

What happened with our Funds

The High Growth Fund returned 3.37% for September and 8.30% for the quarter. The strong performance was on the back of the technology demand and continuing AI demand. The Fund is heavily allocated to this sector (over 25% of the Fund). The other region to perform well was Emerging Markets, where the Fund’s 5% allocation (managed by Schroders) returned 8.2% for September.

Australasian stock markets returned around 2-3% for September, with the small cap stocks outperforming the larger stocks. The Fund benefited from this by its 17% allocation to the Dimensional Australian Sustainability Fund, which targets the smaller cap premium.

The top performing stocks in September were Dutch semiconductor company ASML 32.5%, Taiwan Semiconductor Manufacturing Company 23.3%, Alphabet (Google) 16.1%, Caterpillar 15.7%, Schneider Electric 15.4%, Freightways 15.4%, United Health 14%, Apple 11.5%, Global Clean Energy 9.3%, Nvidia 8.9%, Infratil 8.7%, and Port of Tauranga 8.1%.

The Income Fund returned +0.85% for September, and +1.65% for the quarter. The Fund continues to benefit from central banks lowering cash rates. During September the Fed started cutting rates with a 0.25% cut and signalling more in Q4. The Reserve Bank of New Zealand reduced the OCR by 0.25%, also signalling more to come. The Fund’s New Zealand fixed interest allocation, of around 33%, was the top performer returning 1.4%. Global bond markets weren’t as positive as eurozone yields and Japanese yields ended the month higher. The European Central Bank (ECB) ended its rate-cutting cycle, as did the Bank of Japan (BoJ).

It was a positive quarter for credit markets. US investment grade spreads tightened further, outperforming government bonds. The Fund’s global bond managers allocate over half of their exposure to credit, thus benefiting from this tightening.

The newly launched Focused Growth Fund had a stellar month returning 5.32% for September and 10.29% for the quarter. The strong focus to technology stocks benefited the Fund, as the continuing Artificial Intelligence wave stood out amongst the general market. The top performing stocks in September were Taiwan Semiconductor Manufacturing Company 23.3%, Alphabet (Google) 16.1%, Schneider Electric 15.4%, Apple 11.5%, and Nvidia 8.9%.

The Cash Fund returned +0.29% for September, and 0.85% for the quarter, as it continues to provide the regular income from the short-dated New Zealand fixed interest securities.