International Equities
Global equities rallied hard in November fuelled by the US market, following a decisive victory for Donald Trump in the presidential election. The strong performance of Republicans across Senate and House races means Trump is likely to have few obstacles standing in the way of his agenda, which the market interpreted as meaning lower corporate taxes, less regulation, and a recovery in capital markets. Whether this comes to pass remains to be seen, but the removal of election uncertainty and a pro-business president has provided a tailwind for equities heading towards year end.
However, not all equities enjoyed Trump’s victory, with European equities as measured by the Euro Stoxx 50 Index dropping -0.5% in local currency over the month and Hong Kong’s Hang Seng Index down -4.4% on fears that these regions will suffer most in a tariff war. Technology and health care stocks also lagged the broader market as some of Trump’s cabinet picks have been vocal on a range of issues ranging from big tech’s outsized influence to profiteering from big pharma companies. Financials and energy were among the top performing sectors as they are perceived to be the biggest beneficiaries of lower regulations.
Generate’s global equities outpaced the global index, not because we predicted the election outcome, but because we run diversified portfolios designed to perform under a range of scenarios. The biggest contributor to our gains was McKesson, the US wholesale drug distributor, which rose +26% following an upbeat third quarter earnings result and full year forecast. Also posting double-digit gains were our financials holdings, from large cap banks like Bank of America and Goldman Sachs, to regional banks like Western Alliance and First Citizens. Among the laggards in November were a clutch of semiconductor shares (Broadcom, Taiwan Semi, Micron, LAM Research) as these stocks are exposed to any tariff-induced disruptions to the global chip supply chain. On balance, however, we are still positive on the outlook for chip stocks and believe some of the risks to the sector in 2025 are overblown.
New Zealand & Australian equities
The NZ share market enjoyed a strong month, appreciating +3.4% in November.
Insurance Australia Group (IAG) was the strongest performer in the Australian share component of the funds, appreciating +13.8% over the month. The company announced the acquisition of the insurance business of the Royal Automobile Club of Queensland. This is Queensland’s equivalent of New Zealand’s Automobile Association. IAG has been a relatively recent addition to our portfolio but has been one of the strongest performers over that time. Fisher & Paykel Healthcare was also a strong contributor to the funds; this stock continued its strong run assisted by a weaker NZ dollar (which is great news for exporters like Fisher & Paykel Healthcare). The company also published a solid set of first half financial results and maintained full year guidance despite a quiet northern hemisphere flu season.
Ryman Healthcare was the weakest performing holding in the portfolio. Its share price declined -6.4% during the month. The company released a soft set of results and admitted they would not be cashflow positive this financial year, a target they have had for the past couple of years. We have a small holding in Ryman preferring Summerset as our core exposure to the retirement sector.
Returns to the 30th of November 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
3.99%
28.38%
8.94%
10.21%
10.22%
Growth
Fund
3.31%
23.92%
7.84%
9.40%
9.30%
Balanced Fund^
2.46%
18.82%
10.32%
Moderate Fund***
1.91%
14.86%
4.77%
6.04%
5.79%
Conservative Fund^
1.26%
11.29%
6.16%
Defensive Fund^
0.67%
7.83%
4.55%
Generate Managed Funds:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception** (p.a)
Focused Growth Managed Fund***
3.94%
28.24%
8.93%
9.27%
Balanced Managed Fund^
2.51%
18.88%
10.45%
Conservative Managed Fund^
1.29%
11.26%
6.09%
Thematic Managed Fund^^
5.30%
34.31%
27.26%
Australasian Managed Fund^^
2.24%
18.08%
9.42%
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.
Disclaimer: A previous newsletter contained a numerical error for the Thematic Managed Fund returns since inception, which said 27.46% when it should have been 27.26%. We apologise for the error.
Top Holdings as of the 30th of November 2024
International Equities
Microsoft
Nvidia
Amazon
Apple
Meta Platforms
External Managers
T Rowe Price Global Equity Fund
Te Ahumairangi Global Equity Fund
Worldwide Healthcare Trust
Nuveen ESG Small Cap ETF
CIM Infrastucture III Fund
Australasian Equities
Fisher & Paykel Healthcare
Infratil
Contact Energy
Spark
Auckland International Airport
Fixed Income
Local Government Funding Agency Bonds
Kainga Ora Bonds
NZ Government Inflation Indexed Bonds
Westpac NZ