A short note on the conflict in Iran

The start of March has been marked by heightened uncertainty as the conflict involving Iran continues to unfold. Global markets are acting more defensively, driven by rising oil prices and the broader economic ripple effects that follow. These supply interruptions, affecting a waterway responsible for roughly a fifth of the world’s oil and natural gas flows have led to fuel price increases, shipping delays, and broader concerns about inflationary pressure across global economies.

What we’re doing

As your investment partner, our role is to continuously monitor such developments, assess their true economic significance, and distinguish between short‑term market noise and long‑term changes to fundamental value across sectors and individual holdings. While geopolitical events frequently trigger bouts of volatility, history shows that their long‑term impact on markets is often more limited and temporary than the headlines may suggest. Our team remains focused on what truly affects long‑term performance: company fundamentals, sector dynamics, and disciplined investment processes.

Our approach to managing your money

We recently sat down with SBS Wealth Chief Investment Officer, Martin Pike, to discuss the main factors that have led to our High Growth Fund providing the best returns over the last 5 years for its category in the latest Morningstar tables. All these principles are relevant to how we are navigating the current environment and what it means for your investments. For those interested or seeking reassurance, you can read the full conversation below.

A conversation with Chief Investment Officer, Martin Pike 

Our High Growth Fund recently achieved the #1 spot in its category for 5 year returns in the latest Morningstar KiwiSaver Survey, a result we’re incredibly proud of but one that didn’t happen by accident.

To understand what’s driving this long-term outperformance, we sat down with our chief investment officer, Martin Pike, to talk strategy, themes, risk, and what he sees coming next. What emerged from the conversation was surprisingly simple: a disciplined approach, a commitment to staying invested, and a focus on long-term structural trends rather than short-term market noise.

Staying fully invested: A simple idea with powerful results

One of the biggest contributors to our strong returns is also one of the least glamorous:

We stay fully invested.

While some managers hold large amounts of cash or borrow money to try and tactically “time the market,” we remain focused on doing what high-growth investors expect - staying invested in growth assets.

Being fully invested, particularly in global equities, means we get exposure to some of the world’s most innovative and profitable sectors, including:

• Technology
• Financial Services
• Healthcare Innovation

These opportunities simply don’t exist in the New Zealand market at the same scale.

By avoiding the temptation to second-guess short-term volatility, we've captured more of the market’s long-term upside.

Avoiding the big mistakes (not chasing the big wins)

Performance isn’t just about picking winners - it’s also about avoiding costly missteps.

Martin highlighted that while some fund managers recently went defensive too early (by selling technology stocks at a time when tech continued to rally), we stayed the course and benefited as markets moved higher.

Often, the market’s best days come right after its worst days - times when headlines look the most frightening. That’s why our philosophy is to stay invested, stay diversified, and stay focused on long-term opportunities.

Trying to time the market is notoriously difficult. As Martin put it:

“If you miss the 10 best days in the market, you lose 30–40% of your long-term return.”

Investing in themes that shape the future

Rather than reacting to cycles, we invest in long-term structural themes that we believe will transform industries over the next decade. Three examples of these themes that underpin our strategy are:

1. Digitalisation and AI

AI has dominated markets, and while some valuations are stretched, the underlying impact is real. But instead of betting on which AI company will “win,” we invest in the foundational layers - the “shovels and picks” of the AI revolution:

• Semiconductors
• Infrastructure powering data centres
• Energy required to operate them

Regardless of which AI platform succeeds, they all rely on these core inputs.

2. Healthcare innovation

We invest broadly across healthcare innovation, such as the recent growth in weight loss drugs, where breakthroughs can be extraordinary but individual companies can be risky. A diversified approach allows us to capture upside across the sector without needing to predict which single company will win.

3. Defensive diversification

While our fund has a high growth investment strategy, diversification still matters. Exposure to:

• Emerging markets
• Infrastructure

…has helped smooth volatility and avoid the sharp declines that have affected more concentrated managers.

What we’re watching now

We asked Martin which emerging theme he’s keeping an eye on. His answer: climate and energy transition.

But rather than chasing the hype around solar or wind, he’s looking deeper - towards the technologies and resources that will actually drive decarbonisation over the next 10–20 years, including nuclear and other high-efficiency energy sources.

This long-term perspective is central to how we invest.

The compounding power of “boring”

Perhaps the most revealing insight from our conversation was Martin’s description of our investment philosophy:

“It’s been boring - but that’s what gets you to the end.”

By focusing on:

• small incremental gains
• lower trading costs
• long holding periods
• avoiding emotional decision-making
• not trying to “pick short term winners”

…we’ve built a track record of consistent performance that compounds over time.