OneAnswer KiwiSaver Scheme Conservative Balanced Fund

Performance is after the annual fund charge and before tax. Legal information and disclaimers.

• The fund has a significant weighting to bonds, making up about half its holdings.
• Global bonds had one of their best quarters on record as the likelihood grew that central banks are finished with raising interest rates, thanks in part to an easing of inflation pressures in the US and some European countries. Interest rate markets now suggest the next move by many central banks will be to cut rates (bond prices rise as interest rates fall). 
• New Zealand bonds also delivered strong gains over the quarter, with yields dropping to multi-month lows. Despite this, at its November meeting, the Reserve Bank of New Zealand (RBNZ) raised the neutral rate (the rate at which it expects the OCR to peak) to 5.69%. This implies a further 25-basis-point hike is likely. However, these expectations were tempered by news the domestic economy shrank in the third quarter – well below forecasts, including those of the RBNZ. 
• Shares also had a good quarter, with most global share markets ending higher. US markets were some of the best-performing, with the S&P 500 rising 11.7% and the NASDAQ 100 up 13.8%. In New Zealand, the NZX 50 delivered a 4.2% return despite shares underperforming as the prospect of further interest rate hikes remained. 
• Against the backdrop of an impressive quarter for fixed interest, it was no surprise that our international bond managers contributed to relative performance, while at a tactical level our overweight to both domestic and international bonds continues to add to performance. 
• Meanwhile, although the fund’s largest holding is bonds and other income assets, its holding of shares – notably growth stocks – was another contributor to performance. 
• We remain underweight to international shares, and overweight to domestic and international fixed interest. This reflects our belief that the global economy will start to slow in the coming months, dragged down by the flow-on effect of higher interest rates. We expect labour markets to soften and slow consumption, which will eventually weigh on economic growth. Our base case is that we will see a mild recession in the US in 2024.

The fund aims to achieve (after the fund charge and before tax) over the long term low to moderate returns, allowing for small to moderate ups and downs in value.

The graph below shows the value of a $1,000 investment made at the time the fund launched.

Performance is after the annual fund charge and before tax. Legal information and disclaimers.

The fund invests mainly in income assets (cash and cash equivalents and fixed interest), with some exposure to growth assets (equities, listed property and listed infrastructure). The fund may also invest in alternative assets.

This chart shows the mix of assets that the fund generally intends to invest in.