OneAnswer KiwiSaver Scheme International Share Fund

The International Share 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, and cash and cash equivalents.

The International Share Fund aims to achieve a return (after the fund charge and before tax) that over the long-term outperforms the relevant market index.

Minimum suggested investment timeframe is 10 or more years. The minimum suggested timeframe indicates how long to stay invested to manage short-term ups and downs and give your investment time to recover from any drops in value.

See Past updates for our funds.

Global equity markets experienced a volatile quarter, largely driven by ongoing hostilities in the Middle East, which kept energy prices elevated and fuelled concerns that inflationary pressures could persist for longer than previously expected. Despite the volatility, the MSCI All Country World Index rose 0.9% over the quarter (in local currency terms).

In the US, the S&P 500 Index rose 2.3%, trading to an all-time high, supported by the energy sector, which benefited from higher commodity prices. Meanwhile, the technology sector was mixed with semiconductor stocks coming under pressure, but the large-cap, tech companies were generally stronger. Against this backdrop, the Nasdaq 100 Index edged 0.4% higher.

European equity markets were similarly mixed. The UK's FTSE 100 Index rose 1.8% over the quarter, supported by its relatively high exposure to energy and other cyclical sectors, which benefited from rising commodity prices. In contrast, the Euro Stoxx 50 Index and France's CAC 40 Index were weaker reflecting the region’s reliance on imported energy and key shipping routes that pass through the Strait of Hormuz.

Asian markets also struggled amid the ongoing closure of the Strait of Hormuz. China’s Shanghai Composite Index and Japan’s Nikkei 225 Index fell 5.3% and 4.1% respectively.

Performance across the fund’s underlying managers reflected the sharp divergence between value and growth investment styles. Of the developed market strategies, LSV Asset Management was one of the strongest-performing managers comfortably outperforming its benchmark. The LSV strategy benefited from its overweight exposure to better performing sectors, such as financials and energy-related companies.

In contrast, the Northern Trust Asset Management strategy was one of the weakest performers as growth orientated stocks, and in particular semiconductor and technology stocks, came under pressure. BlackRock’s multi-factor and lower risk strategies delivered more resilient outcomes, highlighting the benefits of maintaining diversified exposures across different investment styles.

At a company level, relative performance benefited from overweight positions in energy companies Marathon Petroleum, HF Sinclair, and Valero Energy Corp. All three recorded gains of more than 50% during the quarter as rising commodity prices improved industry fundamentals. Elevated commodity prices strengthened industry fundamentals by expanding margins and supporting higher earnings and cash flows.

Other positive contributors included RingCentral Inc. and Hewlett Packard. RingCentral, the provider of cloud-based business tools, stood out with its share price nearly doubling over the period after reporting stronger-than-expected Q2 earnings.

Offsetting some positive performance was overweight positions to semiconductor companies, Lam Research and KLA, which both saw their shares down more than 20%, while underweight positions to Microsoft Corp. and Meta (the parent company of Facebook) also weighed on performance. Meta shares rose more than 25% following the launch of Muse, a personal AI agent capable of completing tasks such as booking flights, paying bills, and ordering meals through delivery apps.