ANZ Default KiwiSaver Scheme Conservative Balanced Fund

Performance is after the annual fund charge and before tax. KiwiSaver rates, fees and agreements.

The fund maintains a significant allocation to bonds, which comprise around half of its holdings. Bond markets delivered mixed results. In the US, bonds gained as the Federal Reserve (the Fed) cut interest rates by 25 basis points, its first move of the year. The Fed signalled more cuts could follow, responding to signs of a weakening labour market.

In New Zealand, the Reserve Bank also lowered the Official Cash Rate by 25 basis points, taking it to 3.00% (it has since cut rates further, to 2.50%). The move followed the weaker-than-expected growth data. GDP contracted by 0.9% in the June quarter, marking the third decline in five quarters. Annual growth fell 1.1%, and unemployment rose to 5.2%. Consumer and business confidence remained subdued, although falling mortgage rates may help support a gradual recovery. Investors now expect further cuts, with markets pricing the OCR to fall below 2.25% by year-end.

The fund’s exposure to equity markets remains modest. International share markets continued their strong run, with many indices reaching new highs. The rally was supported by solid company earnings, growing interest in artificial intelligence, and expectations that central banks would cut interest rates. US markets led the way, with the S&P 500 Index and the Nasdaq 100 Index both delivering solid gains. Asian markets also performed well, with China’s share market climbing to a 10-year high. European markets delivered more modest returns, held back by political uncertainty in France and persistent inflation in the UK.

In New Zealand, the NZX 50 Index was also up, with most companies finishing the quarter in positive territory. New Zealand listed property was also a standout performer this quarter, as lower interest rates boosted demand for income-generating assets. International listed infrastructure also delivered positive returns, benefiting from its defensive characteristics in a more uncertain economic environment.

Fund performance was driven by a range of asset classes, with strong absolute returns across bonds, equities, and property. While some tactical positions were exited during the quarter, the fund remained well-diversified and flexible in response to changing market conditions.

We head into the final quarter of the year with a neutral stance across shares, bonds, and currencies. While valuations remain elevated and economic data is mixed, resilient company earnings and ongoing investment in technology continue to support markets. In this environment, we believe a balanced and flexible approach remains appropriate.

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. KiwiSaver rates, fees and agreements.

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

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