OneAnswer KiwiSaver Scheme Australasian Property Fund

• The New Zealand listed property sector continued to underperform, with the sector delivering a 0.1% return over the quarter. This was well behind broader share markets, as well as several other global property markets, including Australia’s listed property market, which delivered a 16.8% gain.
• Rising bond yields hindered the domestic property market, with the 10-year government bond yield climbing 22 basis points, compared to Australia, where the equivalent ended the quarter unchanged.
  
• Central banks in New Zealand and Australia were on the dovish side over the quarter, with the Reserve Bank of New Zealand reducing its forward track – the rate it expects the official cash rate to peak – to 5.60%, down from 5.69%, implying a less-likely chance of further interest rate hikes. And in Australia, it appears the next move by the Reserve Bank of Australia will be an interest rate cut, as inflation appears to be trending in the right direction.
  
• The fund is a concentrated portfolio of 20 property vehicles, the majority of them listed in New Zealand.
  
• Having the biggest impact on fund performance was an overweight position to retirement village operator Summerset Group Holdings. Shares in the company rose 12.6% over the quarter after it delivered a 62% increase in net profit over the year to December 2023 – its second largest jump on record. The company also reported a record 360 sales in the December quarter, with 186 new sales and 174 resales. That took annual sales to 1103. It was a pleasing result for the company given the overall weakness of the retirement sector.
  
• Elsewhere, a strategic underweight position to Precinct Properties New Zealand, also contributed to relative performance with its shares ending the quarter lower. Precinct reported earnings on the softer side with rental income and management fees offset by higher tax costs and higher interest costs. Meanwhile, the company announced late in February that the Haumi Limited Partnership, which is owned by the Abu Dhabi sovereign wealth fund, is selling its stake (~15%) in the company for about $261 million.
  
• Other positive contributors over the quarter including holdings in Charter Hall Group and Property For Industry. Charter Hall was one of the best-performing companies in the sector over the quarter, rising more than 15% – its highest level in about a year.
  
• Holding back gains was overweight positions to two poor-performing retirement sector companies, Ryman Healthcare and Oceania Healthcare, with shares in the companies ending the quarter down 22.8% and 17.1% respectively.
  

The fund invests mainly in New Zealand and Australian listed property assets. Investments may include:

• Companies, funds or trusts that invest in property and are listed or intend to list
• Cash and cash equivalents.

This chart shows the mix of assets that the fund generally intends to invest in – 100% listed property.

See the fund's actual investment mix on page 3 of the fund update.