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:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception**
(p.a.)
Focused
Growth Fund
0.22%
23.85%
8.53%
10.12%
10.16%
Growth
Fund
0.26%
19.88%
7.41%
9.27%
9.25%
Balanced Fund^
0.35%
15.44%
10.12%
Moderate Fund***
0.50%
12.11%
4.67%
5.92%
5.79%
Conservative Fund^
0.62%
9.22%
6.20%
Defensive Fund^
0.73%
6.76%
4.69%
Generate Managed Funds:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception** (p.a)
Focused Growth Managed Fund***
0.21%
23.72%
8.55%
9.15%
Balanced Managed Fund^
0.35%
15.51%
10.24%
Conservative Managed Fund^
0.65%
9.22%
6.14%
Thematic Managed Fund^^
1.39%
31.26%
26.70%
Australasian Managed Fund^^
-0.39%
12.47%
8.58%
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.
Top Holdings as of the 31st of December 2024
International Equities
Nvidia
Microsoft
Amazon
Meta Platforms
Apple
External Managers
T Rowe Price Global Equity Fund
Te Ahumairangi Global Equity Fund
Worldwide Healthcare Trust
Nuveen ESG Small Cap ETF
CIM Infrastructure III Fund
Australasian Equities
Fisher & Paykel Healthcare
Infratil
Contact Energy
Spark
Auckland International Airport
Fixed Income
Local Government Funding Agency Bonds
Kāinga Ora Bonds
NZ Government Inflation Indexed Bonds
Westpac NZ Bonds
NZ Mortages & Secrurities Bonds