Returns to the 31st of January 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
3.51%
17.97%
8.90%
9.76%
9.24%
Growth
Fund
2.77%
14.26%
8.11%
9.07%
8.52%
Moderate
Fund***
1.10%
8.23%
4.87%
5.77%
5.28%
Balanced Fund^
1.87%
10.46%
7.77%
Conservative Fund^
0.48%
6.18%
4.46%
Defensive Fund^
0.03%
4.72%
3.28%
Generate Managed Funds:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception** (p.a)
Focused Growth Managed Fund***
3.51%
17.74%
6.66%
Balanced Managed Fund^
1.89%
10.55%
7.92%
Conservative Managed Fund^
0.46%
6.27%
4.35%
Thematic Managed Fund^^
4.40%
Australasian Managed Fund^^
1.70%
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 our new funds, the Conservative Fund has been 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.
International Equities
Global equities enjoyed positive momentum in January with strong rallies across most major regions including the US, Europe, and Japan. Indices in China and Hong Kong missed out on the rally, however, due to concerns about slowing economic growth and geopolitical tensions.
In the key US market, the Communications Services sector was the best performer, aided by a bumper quarterly result from TV streaming giant, Netflix. Technology shares also did well, particularly semiconductor stocks, with Nvidia rising another +24% in the month and Advanced Micro Devices increasing +14%. The European semiconductor equipment giant, ASML, was another big gainer, rising +17% in January after the company painted a bright picture for the industry, fuelled by AI demand.
Overall, early earnings results for the December quarter have been good enough to justify the robust rally in global equities over the past year. The missteps to date have been largely company or industry specific rather than indicative of weakening economic conditions. For example, Alphabet sold off post earnings after flagging higher capex for AI development, and United Health’s stock was weak due to elevated US medical costs.
February will bring more quarterly earnings, with a raft of consumer stocks reporting, which investors will be pouring over for signs of weakening demand. While we are becoming incrementally more cautious on some areas of discretionary spending – travel, apparel – there are few signs, to date, of the recession that many have predicted for 2024.
New Zealand & Australian equities
New Zealand and Australian share markets enjoyed a positive start to the year with the S&P/NZX50 rising +0.9% and the S&P/ASX200 rising +1.2%. After producing very strong returns in December, New Zealand listed property trusts in aggregate fell -0.4%.
There were multiple notable performers within the Australasian portfolio in the month, with the most impressive being Summerset, Infratil and the Australian banks.
Summerset released their fourth quarter operating statistics, including new retirement village unit sales and resales of existing units, which were ahead of analysts' expectations. Summerset has been operating in a challenging environment over the last 12 months with respect to their exposure to the housing market, and in this context the results were well received. Summerset’s share price rose +7.2%.
Infratil rose +5.3% over the month and made an important announcement with respect to their portfolio holding in Canberra Data Centres (CDC). Late last year, Infratil had announced CDC’s intention to materially increase the capacity build to the tune of around 265MWs. In January, they followed this up with the announcement that they had signed contracts for the sale of 110MWs of capacity to new customers, reinforcing that the much talked about demand tailwinds for data centre capacity are alive and well.
The portfolio’s two Australian bank holdings, National Australia Bank and Westpac, enjoyed a strong start to the year rallying +6.2% and +5.6% respectively. There are a number of factors at play here, one of which is that the banks have potentially been much too conservative in their provisioning for bad loans. While the economy is slowing, it is slowing less rapidly than bank expectations. Should the economy continue to exhibit resilience, the reversal of these bad debt provisions will result in increased profits. A second reason is that net interest margins the banks are earning should have been increasing in recent months as their cost of borrowing has declined, while mortgage rates have remained stubbornly high.
On a negative note, one of the smaller retirement village and care operators, Oceania Healthcare, fell -7.9% in January. While there was no news released from the company, there was market speculation that the stock may be removed from a large global share index. The significance of this is that if the speculation proves accurate, it may bring about forced selling of the stock by passive funds that track that particular index.
Top Holdings as of the 31st of January 2024
International Equities
Microsoft
Berkshire Hathaway
Amazon
Nvidia
CRH
External Managers
T Rowe Price Global Equity Fund
Te Ahumairangi Global Equity Fund
Worldwide Healthcare Trust
European Opportunities Trust
CIM Infrastructure III Fund
Australasian Equities
Infratil
Spark
Contact Energy
Fisher & Paykel Healthcare
Mercury
Fixed Income
Kāinga Ora Bonds
Local Government Funding Agency Bonds
TR Group Bonds
Westpac Bonds
ANZ AU Bonds