OneAnswer KiwiSaver Scheme Select 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.

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.

As a factor‑based manager with a focus on selecting high quality stocks, the fund does not typically take significant sector positions against the benchmark. Nevertheless, amid a sharp rotation out of technology and into energy following the surge in oil prices, it was unsurprising that stocks in these sectors were the primary drivers of performance. The energy sector as a whole close to 40% in the quarter, as most other sector delivered moderate or negative returns in the quarter.

Within the energy sector, the fund’s underweight exposure to two of the largest energy stocks – Exxon Mobil Corporation and Chevron Corporation – weighed on performance. This was offset by overweight positions in Equinor, Valero Energy Corp., and Cheniere Energy Inc., all of which contributed positively. Equinor was a notable standout, with its share price rising nearly 90% over the quarter.

While the technology sector underperformed more broadly, pockets of resilience emerged, particularly among AI infrastructure‑related names, reflecting continued demand for chips and supporting hardware. Against this backdrop, the fund benefited from its overweight positions in Western Digital Corp., Lam Research Corp., and Applied Materials, Inc., whose shares rose 58%, 26%, and 34% respectively. Reinforcing this theme, reports that Western Digital had already sold out its entire 2026 hard disk drive (HDD) capacity highlighted the strength of underlying AI‑driven demand.

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.