October marked another positive month for global markets, extending the momentum we saw through the September quarter. US equities posted their sixth consecutive monthly gain, with the S&P 500 up 2.3% and the Nasdaq 100 surging 4.7%, driven by strong Q3 corporate earnings and continued enthusiasm around Artificial Intelligence investment. A widely anticipated interest rate cut from the US Federal Reserve and additional easing measures were also announced later in the month, helping both equity and fixed interest performance. 

Sector performance out of the US was led once more by the tech sector and followed by the healthcare sector, two areas which we target in particular through our Investment Themes. Financials and Consumer Discretionary (which we target to a lesser extent) lagged somewhat, while Materials and Real Estate were hit a bit more.

Outside the US, European markets hit new highs, with the UK and France leading the way. The European Central Bank held interest rates steady, as inflation trends moved closer to target. In Asia, central banks maintained accommodative stances which helped support Emerging Markets equities. 

At home, the Reserve Bank cut the OCR 0.5% to 2.5% early in the month, noting inflation sitting near the top of target 1-3% band. While economic data remains underwhelming, the rate cut and high commodity prices helped the NZX 50 index rise ~0.87% and close the month very near to the all-time high. Across the ditch in Oz, the month started strong with energy and tech leading, supported by US-China trade optimism. However, inflation came in hotter than expected, leading to reduced expectations of a rate cut, triggering volatility. Nevertheless, the ASX 200 ended the month up modestly +0.84%. 

Global bond markets delivered mixed returns in October, with the key barometer the Bloomberg Global Aggregate Bond Index down -0.3% in USD but +0.7% when hedged to NZD. The index was weighed down by weakness in government bonds in certain markets, while corporate bonds and emerging market debt outperformed. Credit spreads remain tight across investment grade and high-yield bonds. 

The models had another good month in October, with steady results across the board for the risk profiles. The standout portfolio was the Future Themes Portfolio, returning 7.04% for the month, followed by the Direct Global Equity Portfolio with 5.39%. The more aggressive portfolios are now closing in on 20%p.a. for the 12 months to the end of October and have produced strong gains over the longer-term figures now also. The 100/0 and 80/20 are now both over 10%p.a. for the 5 years to the end of October. The lower risk profiles continue to outperform inflation and cash in the bank. 

There have been no changes to the portfolios underlying holdings over the quarter.