Investor update

Lifestages Investment Funds - April 2024

11 April, 2024

Welcome to your April update

Dear investor, welcome to the Lifestages Investment Funds Investor Update for April 2024. Below you will find the latest performance data and market commentary from your SBS Wealth Investment Management Team. 

Performance data

Performance as at 31 March 2024. 

Fund Option 1M 1Y 5Y pa
World Equity Portfolio 3.88% 24.42% 11.62%
Australasian Equity Portfolio 2.71% 4.57% 4.65%
Corporate Bond Portfolio 0.99% 5.29% 0.41%
World Bond Portfolio 0.75% 3.78% -0.09%

For more information about how performance is calculated and more performance periods, click here. 

Market update

2024 got off to a roaring start. Global share markets provided great gains during the first quarter of 2024 – particularly the US (+16% in NZD terms), after shaking off concerns of a recession that had become embedded in the narrative earlier in 2023. Fixed interest followed a bumpy road as rate cut expectations were tempered.

The Lifestages World Equity Fund benefitted from a market rally which was driven by the wider Information Technology, particularly semi-conductors (e.g. Nvidia +93%, ASML +36%), Communication Services (Meta +45%, Disney +43%), and Consumer Discretionary (Toyota +45%) sectors. In contrast, several of the defensive sectors – Utilities, Energy, and Consumer Staples, performed less well. This impacted on the New Zealand market, (up 3% ytd) and several other Asian/Pacific markets.

The Lifestages Australasian Equity Fund managed to return 3.25% for the quarter thanks to the exposure to the Australian market – we favour a tilt to this side within the fund. New Zealand equities disappointed somewhat which weighed on performance.

Reaccelerating inflation data during the quarter led Bond yields to rise in January (from the December low of 3.8%) and end March at 4.2%. Despite rising yields on Bonds (which leads to a temporary reduction in the value of the Bonds), the World Bond Fund and Corporate Bond Fund still managed to return 0.15% and 0.59% respectively for the March quarter.

Inflation remains sticky, albeit trends have improved globally, and markets are pricing central bank rate cuts in for the second half of the year.  The equity markets look markedly better than six months ago. The US outlook has improved, with risks of a recession receding, however, growth looks to be slowing with manufacturing jobs declining. Services jobs appear to be holding up well in contrast, which is helping to negate a slowdown.

We remain aware of the risks. We favour high quality US equities that fit into our key investment themes for the long-term such as digitalisation and innovative healthcare. The funds also factor in Environmental Social Governance (ESG) considerations like carbon intensity and fossil fuel involvement. We also favour shorter duration fixed interest to help protect investors' capital.

The Magnificent 7 stocks (Apple, Google, Microsoft, Tesla, Nvidia, Meta, and Amazon) are capturing a greater weight of major stock indices. While these stocks are among our core holdings, the funds are well-diversified among sectors and our long-term investment themes to manage concentration risk. As active managers, we have greater control of such risks compared to passive managers, who are forced to trade in line with their benchmark index.