OneAnswer KiwiSaver Scheme Australasian Share Fund

Australasian equities delivered positive returns over the quarter, although gains lagged the strong rally seen across global share markets. New Zealand equities benefited from improving global market conditions, although elevated inflation, weak consumer confidence and subdued economic growth continued to weigh on sentiment. The Reserve Bank of New Zealand left the Official Cash Rate unchanged at 2.25% throughout the quarter, while business confidence improved noticeably towards quarter end.

Across the Tasman, Australian equities also moved higher, supported by stronger commodity prices and improving market conditions. Inflation remained above target, prompting the Reserve Bank of Australia to raise interest rates during the quarter. While tighter monetary policy weighed on some sectors, corporate earnings generally remained resilient and helped support the market.

Relative performance was driven by stock selection across both the New Zealand and Australian portions of the portfolio. Pacific Edge was the largest contributor, with its share price rising strongly following progress in regaining US health insurance coverage, which improved confidence in its growth outlook. An underweight position in a2 Milk also added significant value as the company faced ongoing earnings pressures and supply chain disruptions linked to the conflict in the Middle East.

Elsewhere, an overweight position in campervan company Tourism Holdings contributed positively after the company received a takeover approach from a private equity-backed consortium. Overweight holdings in logistics companies Mainfreight and Freightways also added value, supported by resilient operating performance, while underweight positions in Gentrack Group and SkyCity Entertainment further aided relative performance as both lagged the market’s return over the quarter.

Across the Australian portfolio, holdings in building products manufacturer James Hardie Industries and insurance broker Steadfast Group were among the strongest contributors. James Hardie benefited from improving expectations for US housing activity, while Steadfast performed strongly as investors responded positively to the resilience of insurance earnings.

Offsetting these positives were a handful of positions across both markets. In Australia, biotech company CSL was the largest detractor as investor concerns persisted around earnings growth following the company's downgrade to its FY26 guidance, including a significant asset impairment. In New Zealand, EBOS Group weighed on performance after warning that rising fuel and material costs could affect earnings, while an underweight position in Skellerup detracted as the company performed strongly over the quarter.

Despite the detractors, strong stock selection across both New Zealand and Australian equities more than offset weaker contributions elsewhere, resulting in overall outperformance relative to the benchmark over the quarter.