Equity markets and bond markets for June overall in New Zealand dollars were again positive, culminating in double digit gains for equities in Q2 2026 and positive returns for bonds. The quarter was the best performing equity quarter since Q2 2020, where we experienced a sharp recovery after Covid. Returns for the funds were boosted by the strength of the US dollar, which meant when converted back to NZ, all the equity funds were positive. 

2026 to date has produced double digit performance for global equity markets, rewarding those that maintained their investment in the World Equity Portfolio, or the Growth and Aggressive investment strategies, ignoring the noise around Middle East conflict, fears of inflation rising, Donald Trump, and pending elections. 

If we dig deeper, equity markets were volatile during the month, with investors concerned about the sustainability of the AI trade and inflation fears. Gains were skewed. Some markets were up (Europe, Japan, NZ, Australia, US small caps +7%), some were down (US top 50 –4.6%, Asia –1.5%), some sectors were up (European IT +9%, Japan IT +14%, Europe & Japan Financials +5.6%) and some were down (Energy and Communication services were down 7% each, US IT –3%). 

AI remained the dominant market theme, but we saw a change within it. Where earlier in the quarter we saw gains concentrated in US hyperscalers and platform companies, in June this shifted toward semi-conductor manufacturers, memory producers, power infrastructure, and data-centre supply chains. This had its biggest positive impact in Taiwan and South Korea. 

Bond yields were largely unchanged in June and the quarter. New Zealand bond delivered better returns than their global counterparts, close to 3% for Q2 versus 1%. 

Looking at other asset classes, we saw some large declines in value. Commodities retreated around 10%, with Crude Oil down 17% in June, 20% for Q2, and Gold down 12% in June and 14% for Q2. Digital assets (eg cryptocurrencies, blockchains) remained under pressure, down 17% for June and 33% for the year to date. 

To reiterate the SBS Wealth Investment Funds do NOT hold digital assets, gold or commodities directly.  

The other big news in June was the initial public offering (IPO) of SpaceX, a rocket and spacecraft manufacturer, founded by Elon Musk back in 2002. The IPO valued SpaceX at almost USD1.8 trillion, making it the largest public offering over. We did not participate in this offer, believing the valuation to be extravagantly high and preferring to wait until further information about the company is made public. In saying that, we do get some exposure through companies like Alphabet and Nvidia, who are SpaceX shareholders. 

The World Equity Portfolio returned an impressive 2.83% for June, and 14.08% for Q2. The megacaps which have held the fund together for most of the last few years, retracted in the month, on the back of concerns of ongoing revenue from the AI trade. However, a lot of this was offset by our recent shift from the magnificent 7 to other IT companies (Micron, LAM Research, GE Vernova, Vertiv and Equinix), plus our diversification through holding Healthcare, Financials and Industrial stocks. Whilst we remain heavily invested in Information Technology, we have spread our exposure within the AI stack further down the chain (from software to hardware like semi-conductors, data centres and networking). 

Top performers were LAM Research 45%, Palo Alto 29%, ASML 28%, GE Vernova 28%, Caterpillar 27%, Micron 25%, TSML 20%, JNJ 18%, Home Depot 18% and Vertiv 17%. 

The Australasian Equity Portfolio returned 2.12% for the month of June and 6% for the quarter. The New Zealand stock market led the way, up 2.8%, with the larger cap stocks outperforming the smaller cap stocks. The Australia market was not as positive as the NZ market, but still up 0.7%. However, a stronger AUD boosted Australian share returns by about 1.3%. Sector wise there was a rotation from Q1, with Consumer Discretionary, IT and Real Estate leading the way, while Energy and Materials were the biggest detractors, both sectors we are underweight. Healthcare continues to disappoint. 

Top performers for the month were CSL +20.4%, Woolworths 15.1%, Wesfarmers 14.8%, QBE Insurance 12.8%, Port of Tauranga 9.5%, Summerset 8.5%, Ebos Group 6.7%, Macquarie 6.3%, and FPH 5.9%. 

The World Bond Portfolio had a quiet month, returning +0.33%, and +1.13% for the quarter. The fear of inflation rising out outweighed the strong AI related investment support. Global bond markets moved from expecting a smooth easing cycle to pricing a higher probability that central banks would need to pause or even tighten again (raise interest rates). Longer-dated yields remained elevated as investors demanded compensation for inflation risk, fiscal deficits and policy uncertainty. The Portfolio remains defensively positioned from a duration perspective and diversified across sovereign bonds and corporate credit. 

The New Zealand Bond Portfolio returned another impressive +1.04% for the month with both the government stock component and the credit component of the fund performing extremely strongly. Year to date the underlying manager has added small amounts of value though owning inflation indexed linked bonds, security selection amongst the corporate issuances. A twelve-month return of 5.03% has been pleasing in a benign interest rate environment. 

Investment Strategies had strong results for the month again on the back of the positive returns in all the underlying Investment Funds – returns ranged from +2.65% to 1.20%. The performance of the strategies has also been strong for the quarter and year to date. The High Growth Strategy returned 12.03% for the quarter, Growth 9.92%, Balanced 7.81% and the Conservative strategy 4.65%. Over the year performance ranged from 19.82% to 7.55%.