OneAnswer KiwiSaver Scheme International Property Fund

• International listed property held up reasonably well over the period, navigating a backdrop of shifting interest rate expectations, trade tensions, and geopolitical developments. While broader equity markets were buoyed by improving sentiment and temporary trade agreements (following early sharp falls), listed property showed resilience, supported by easing monetary policy in key regions and strong performance in select sectors.
• Asia and Europe led regional gains, with Hong Kong performing strongly as it benefitted from falling interest rates and improving rental fundamentals. Continental Europe was supported by a rate cut from the European Central Bank, while Australia strengthened on expectations of further easing following an additional rate cut from the Reserve Bank of Australia. In contrast, North American markets underperformed, weighed down by elevated interest rates, tariff uncertainty, and fiscal concerns in the US.
• Sector performance was mixed. Data centres led in April and May due to renewed AI investment and strong earnings but reversed in June following cautious guidance and increased capital expenditure. Diversified REITs, hotels, and offices gained late in the quarter, while industrials and healthcare lagged. Overall, sector rotation reflected shifting investor sentiment and sensitivity to macroeconomic signals.
• The fund outperformed its benchmark, supported by strong stock selection across sectors and regions. Industrial holdings were a key driver of relative performance –particularly Prologis, Rexford Industrial Realty and Americold Realty Trust – which rebounded from earlier weakness as global trade sentiment stabilised. Storage companies Public Storage, Shurgard Self Storage and Big Yellow Group also added value, benefiting from steady demand and resilient earnings.
• In the data centre space, Digital Realty Trust performed well, supported by strong Q1 results and AI infrastructure investment. However, its holding in Equinix detracted, as shares fell sharply in June after cautious company guidance.
• Residential exposure was mixed. German-listed TAG Immobilien AG delivered strong gains, reflecting stable fundamentals and easing rate pressures. The fund also benefitted from its underweight position in AvalonBay Communities, which underperformed. However, overweight positions in US names such as Equity Residential and Federal Realty Investment Trust weighed on performance due to affordability concerns and weaker consumer sentiment.
• The healthcare sector was the most significant drag on relative returns, with holdings in Ventas, Welltower and Healthpeak Properties underperforming amid ongoing concerns around cost pressures and occupancy trends.

The fund invests mainly in international listed property assets. Investments may include:

• Companies, funds or trusts that invest in property and are listed or are soon to be listed
• 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.