ANZ Default KiwiSaver Scheme Conservative 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 make up more than half of its holdings.

Bond markets delivered mixed results over the quarter. In the US, bonds were supported by two rate cuts from the Federal Reserve. European bond markets were more mixed. German government bonds weakened as the European Central Bank kept interest rates steady, while UK bonds were some of the strongest-performing after a surprise drop in inflation saw the Bank of England cut interest rates.

New Zealand bonds were weaker, despite further monetary easing by the Reserve Bank of New Zealand (RBNZ). While the RBNZ cut the Official Cash Rate twice – by 50 and then 25 basis points – markets interpreted November’s move as potentially the last in the easing cycle, triggering the sell-off in bonds.

The fund’s exposure to share markets remains modest. Global share markets closed the year on a positive note, although performance varied by region. In the US, major indices posted solid gains, with the S&P 500 and Nasdaq both up 2.7% over the quarter. There was a pause in the AI-driven momentum that dominated earlier in the year.

Meanwhile, Europe delivered standout returns. Easing inflation boosted sentiment, driving the FTSE 100 up 6.9%, while the Euro Stoxx 50 rose 5.0%. Japan was another strong region, with the Nikkei 225 delivering double-digit gains, taking its 12-month return to 28.7%.

New Zealand shares posted more modest gains over the quarter, with the NZX 50 up 1.9%, bringing its annual return to 3.3%.

Positive fund performance was largely driven by bond allocation – notably an underweight to weaker-performing domestic bonds and an overweight to international bonds. Meanwhile, closing out the overweight position in the New Zealand dollar added further gains. However, these gains were partly offset by the fund’s allocation to Australian bonds, which came under pressure amid renewed inflation concerns.

The fund aims to achieve (after the fund charge and before tax) over the long term low relatively stable returns, allowing for small 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 a smaller 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.