ANZ KiwiSaver Scheme Growth Fund

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

• It was a challenging quarter for global share markets, with most developed markets ending lower as rising bond yields created headwinds for growth assets. 
• At a sector level, real estate and technology companies underperformed, while energy was the only strong performer, helped in part by rising oil prices. Meanwhile, in New Zealand, the NZX 50 fell 5.2%, making it one of the worst-performing regions. Although recent company earnings updates were broadly in line with expectations, companies’ forward guidance was somewhat disappointing. Weak business and consumer confidence also didn’t help.
• Global bond markets also had a challenging quarter. Despite signs that central banks were winning in their battle against inflation, resilient economic growth in some of the major economies meant sentiment shifted towards the prospect of interest rates staying ‘higher for longer’. What’s more, expectations remained for further potential hikes before a peak in rates is reached. This was certainly the case in the US, where market pricing suggests one more quarter-percent move higher later this year.
• New Zealand bonds were also lower over the quarter after the RBNZ raised its terminal rate, which suggests there may be another interest rate hike later this year. Meanwhile, stronger-than-expected growth data reaffirmed that the central bank would need to hold interest rates at a restrictive level for a prolonged period.
• Equity stock selection was the main detractor on fund performance, largely driven by an underweight position to the strong-performing energy sector. Meanwhile, an underweight position to the poor-performing consumer discretionary sector, which would have ordinarily been beneficial, was offset by some weak individual company performance. 
• In bonds, it was no surprise that our international fixed interest managers faced challenges, especially as US bonds were some of the worst-performing over the quarter. 
• At a tactical level, we remain underweight to international equities and overweight to global and New Zealand bonds. This reflects our belief that the global economy will start to slow in the coming months as central banks hold rates in restrictive territory for an extended period of time. This will soften labour markets and slow consumption, which will eventually weigh on economic growth. In New Zealand, consumer spending is slowing, and households are starting to roll off ultra-low mortgage rates, which will decrease disposable income.

The fund aims to achieve (after the fund charge and before tax) over the long term high returns, allowing for large 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. Rates, fees and agreements.

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

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