International Equities 

Global equity markets closed out the year on a softer note in December, with the MSCI World Index falling -2.6% in USD terms, but gaining +3.1% in NZD terms due to further weakness of the Kiwi currency relative to the US Dollar - which was buoyed by renewed expectations of higher interest rates in the world’s biggest economy. 

 The combination of these macro conditions, and further market uncertainty about the policy directions of the incoming Trump administration, led to a market in which very few stocks performed well. Our strongest performer was AI semiconductor company Broadcom, which jumped +43.4% in the month, and was closely followed by peer Marvell (+19.2% for December), which we also own. Our next best performers were Hermes (+12.4%) and Alphabet (+12.2%), which both rebounded after incremental data points showed that their businesses were performing better than expected. 

 Our weakest performer was homebuilder Pulte Homes, which fell -19.3% due to the prospect of softer demand from potential homebuyers after the recent increase in mortgage rates. We identified this risk early and materially reduced our position in the stock early in the month, and we look forward to rebuilding our investment in this very well-managed business at lower prices in the future, probably in the second half of this year. 

New Zealand & Australian equities 

The New Zealand share market increased slightly in December with the S&P/NZX50 appreciating +0.3%. There was limited meaningful news released during the month and so any large share price moves were mostly the result of technical, non-fundamental drivers. 

The strongest performing stock in the domestic portfolio was Auckland International Airport, which appreciated +12.1% in December. Members might remember that Auckland Council transferred control of their ~10% residual holding in Auckland International Airport to the Auckland Future Fund at the end of September. At that time, it was clearly signalled that the Auckland Future fund would sell down this ~10% share. News that almost ~10% of the company would be for sale subsequently weighed on the company's share price. Thus, it was of limited surprise to see the company’s share price rebound after the council finished selling its stake. This strong performance was partly driven by the removal of the council overhang. However, a fair amount of the performance also came from passive funds buying more Auckland Airport shares to match the company’s higher weighting across key indices. We used the sell down as an opportunity to add to our funds’ existing positions. 

The weakest performing stock in the portfolio was Mercury. We strongly suspect that this weakness is not related to the company’s fundamentals and is instead a result of the increased probability that Mercury will be replaced by Contact Energy in the all-important MSCI World index. The good news is that our domestic portfolio has a larger position in Contact Energy than Mercury, so the losses made by Mercury are being offset by a strong share price performance by Contact Energy. Our funds are very likely to take advantage of the share price weakness in Mercury created by the indiscriminate selling from passive funds.    

Returns to the 31st of December 2024 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

Except for the $3 per member per month administration expense that is charged to KiwiSaver members.

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of new funds in May 2022, our original Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance.

Generate’s fund updates can be found here for KiwiSaver Funds and here for Managed Funds.

Top Holdings as of the 31st of December 2024

Generate total Funds Under Management (FUM) as of 31st of December 2024: $6,729,119,441

International Equities 

Global shares began 2025 on a positive note in January, returning +3.6% in USD terms. While it might appear that the New Year is picking up where 2024 left off, the components of the January rally were different to what we saw last year.

The US market rose less than the global index, up +2.8%, and the much vaunted Magnificent 7 stocks lagged the broader S&P 500. The best performing US sectors were Communication Services and Health Care, while the worst performer was Technology, dragged down by a -10% selloff in last year’s market darling, Nvidia.

Even though Generate’s portfolios are overweight both the US and technology shares, we comfortably outperformed the global index thanks to a raft of positive earnings surprises from key holdings. The big winners were in a diverse range of industries from cruise ships (Royal Caribbean) to streaming services (Netflix) to health care (HCA Holdings).

On the downside, semiconductor stocks sold off sharply in January, a combination of tariff fears and uncertainty in the AI market following the release of China’s DeepSeek latest large language model. These uncertainties are likely to persist in the near term, but we don’t see any slowdown in AI investment levels on the horizon and remain comfortable holding key AI-exposed stocks.

New Zealand & Australian equities

January was a challenging start to the year for New Zealand markets, with the S&P/NZX50 declining by -0.9%. In contrast, Australia’s S&P/ASX200 rose by +4.6%.

Two key factors contributed to the decline in the NZ market: Infratil Limited (-11%) and Fisher and Paykel Healthcare (-2.1%). Infratil experienced a gradual decline throughout the month, with a sharp drop occurring at the end of January following the revelation of China-based DeepSeek. DeepSeek published a paper which, at first glance, gave investors the impression that they had developed AI tools at a significantly lower cost compared to US-based platforms. This led the market to question the future demand for all things AI, including data centres, which form a substantial part of Infratil’s portfolio via their holding of CDC in Australia. Fisher and Paykel Healthcare’s decline came without new developments.

In positive news, Oceania Healthcare increased by +12.3%, and Mercury Energy gained +7.9%. The gains for Oceania were likely influenced by investor optimism that lower interest rates may lead to a rise in residential property prices over 2025. Oceania is exposed to this thematic as their retirement living products are priced based on house prices.

Additionally, a stronger housing market enables potential village residents to sell their homes more easily ahead of moving into a village. Mercury’s gain could be attributed to recovery from index-led selling that affected the stock in December, as investors prepared for a potential exit of Mercury from the MSCI World index. If this event occurs, it could result in a significant number of passive-investors selling the stock.

Returns to the 31st of January 2025 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

Except for the $3 per member per month administration expense that is charged to KiwiSaver members.

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of new funds in May 2022, our original Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance.

Generate’s fund updates can be found here for KiwiSaver Funds and here for Managed Funds.

Top Holdings as of the 31st of January 2025

Generate total Funds Under Management (FUM) as of 31st of January 2025: $6,957,739,402