OneAnswer KiwiSaver Scheme International Share Fund

Global equities finished the first quarter mostly lower, largely driven by a late-quarter sell-off on the back of the US-Israel strikes on Iran. The catalyst was a sharp rise in the price of oil, which saw equity prices fall sharply and end the quarter in negative territory. The price of oil ended the quarter at about US$100, up 70%, in New Zealand dollar terms.

Negative sentiment was compounded by weakness in AI-related sectors, with software companies being hit the hardest on concerns AI could automate key functions.

In the US, the S&P 500 Index and Nasdaq Composite Index fell 4.3% and 7.0% respectively. Both indices entered correction territory, which is a 10% decline from a recent peak. European markets saw similar patterns. The Euro Stoxx 50 Index was down 3.6% and France’s CAC 40 Index fell 4.0%.

Asian equity markets also experienced a sell-off into March, but strong gains earlier in the quarter meant several markets remained higher on a quarterly basis, bucking the broader global trend. Notably, Japan’s Nikkei 225 Index finished the quarter in positive territory despite the late period weakness.

In the first quarter, global equity markets were marked by sharp sector rotations, with the energy sector significantly outperforming as higher oil prices and geopolitical tensions boosted earnings and investor demand. The sector, overall, was up a remarkable 38% for the quarter. Conversely, information technology and consumer discretionary lagged as investors took profits in previously strong growth areas.

In this environment, among our underlying managers, value manager LSV was the best performing over the quarter and comfortably outperformed the benchmark. The BlackRock factor-based strategy also performed well in the quarter, benefitting from a disciplined and well-balanced investment approach.

At the sector level the fund had a modest underweight to the energy sector, which dragged on performance in the quarter. With the dramatic spike in oil prices, big energy companies such as Exxon Mobil Corporation and Chevron Corporation, saw their share prices both up about 40%.

At a company level, underweight positions to some of the large growth names contributed to relative performance, including Microsoft Corporation, Meta Platforms Inc., and Amazon.com Inc. with all three ending the quarter with double-digit declines. Microsoft saw the biggest fall, ending the quarter down more than 20%. Its fall was exacerbated following the release of Anthropic’s Claude Cowork platform, which weighed heavily on software companies.

Underweight positions to Salesforce, Inc. and Broadcom Inc. – two other software names – also contributed to relative performance, with their shares down sharply over the quarter.

In terms of overweight positions, Equinor ASA and Novartis AG stood out. Equinor shares surged more than 50%, while Novartis shares gained more than 10%, supported by the company’s sale of its ~70% stake in its Indian unit to a private‑equity‑led consortium. Additionally, encouraging phase 3 trial results for Vanrafia, a treatment aimed at slowing kidney decline also boosted sentiment.

The fund invests mainly in international equities. Investments may include:

• Equities in companies that are listed or are soon to be listed on a stock exchange
• Cash and cash equivalents.

This chart shows the mix of assets that the fund generally intends to invest in – 100% equities.

See the fund's actual investment mix on page 3 of the fund update.