OneAnswer KiwiSaver Scheme Select International Share Fund

Global equities had a stellar second quarter, with many markets trading to record highs, shrugging off the ongoing uncertainty in the Middle East. The rally was led by the technology sector, which continued its upward momentum. In the US, strong corporate earnings and easing geopolitical concerns supported returns, while Asian markets were among the strongest performers globally, led by Japan and South Korea. European markets also delivered solid gains as falling oil prices helped ease inflation concerns and improve investor sentiment.

The manager follows an active and systematic approach and focuses on investing in 200-250 high-quality companies with strong financial foundations and reliable performance. Quality companies typically have high profitability, low debt, stable earnings and well-run management teams.

As a quality-based manager, the fund does not typically take significant sector positions relative to the benchmark. Nevertheless, sector performance varied considerably during the quarter. Positive contributions came from industrials, energy, consumer staples and financials, while information technology was the largest detractor from relative performance despite delivering very strong absolute returns.

At a company level, performance was supported by several technology holdings that benefited from continued investment in artificial intelligence infrastructure and semiconductor demand. Western Digital, Applied Materials, Lam Research, KLA Corp and Tokyo Electron were among the strongest contributors, while Fortinet, Cisco Systems and NetApp also added value.

Outside technology, the fund also benefited from not holding energy companies Exxon Mobil and Chevron, both of which underperformed as oil prices retreated following an easing in Middle East tensions.

Offsetting these positives were several underweight or non-holdings in some of the benchmark's strongest-performing technology names. Micron Technology, Advanced Micro Devices, Intel Corporation, Marvell Technology and Palo Alto Networks all delivered exceptionally strong returns during the quarter and detracted from relative performance. Holdings in Intuit, Equinor and Zoetis also weighed on returns.

The fund invests mainly in international equities with a focus on environmental, social and governance (ESG) considerations. Investments may include:

• Equities in companies that are listed on a recognised 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.

The OneAnswer KiwiSaver Scheme Select International Share Fund was formerly the OneAnswer KiwiSaver Scheme Sustainable International Share Fund.