Welcome to your June update
Dear investor, welcome to the SBS Wealth Investment Funds Investor Update for June 2025. Below you will find the latest performance data and market commentary from your SBS Wealth Investment Management Team.
Performance data
Performance as at 31 May 2025.
| Strategy | 1M | 3M | 6M |
| High Growth Strategy | 4.56% | -2.62% | -1.73% |
| Growth Strategy | 3.59% | -2.00% | -1.12% |
| Balanced Strategy | 2.61% | -1.40% | -0.56% |
| Conservative Strategy | 1.15% | -0.53% | 0.23% |
| Portfolio | 1M | 1Y | 5Y pa |
| World Equity Portfolio | 4.64% | 11.12% | 12.06% |
| Australasian Equity Portfolio | 4.33% | 5.79% | 5.23% |
| World Bond Portfolio | -0.31% | 4.39% | 0.11% |
| New Zealand Bond Portfolio* | -0.31% | 6.99% | 0.70% |
* Previously Corporate Bond Portfolio
Performance is shown after fees and before tax. For more information about how performance is calculated and more performance periods, click here.
Market update
Equity markets bounced back in May to such an extent that all the losses in 2025 have now been recovered in all countries except at home in New Zealand. The retrenching on tariffs by Donald Trump was the catalyst for the equity market rebound. US and China agreed a 90-day suspension of tariffs on most goods. In late May, the US Supreme Court ruled that President Trump’s “Liberation Day” tariff proposals are illegal as he did not have the authority to use the emergency economic powers legislation that he cited when he imposed them. The White House is appealing the ruling.
However, the more encouraging news was the announcement of some robust Q1 corporate earnings. The biggest benefiter was US technology stocks, up 10% for May. Communication Services and Consumer Discretionary were not far behind, around 9.5%. Healthcare was the only detractor during May, as Trump announced a drug pricing reform.
European equities continue to lead the way in 2025, up 20% ytd. Japanese equity markets rallied strongly, driven by strong large-cap performance. Emerging Markets also rose during May, particularly the markets of Taiwan, Korea and Hong Kong, which were supported by renewed investor optimism about artificial intelligence.
The US dollar continues to weaken, with the Japanese Yen joining it in May. This has a negative performance impact on our US shares in the funds.
The New Zealand and Australia sharemarkets were both up 4% during May. Generally smaller capitalisation stocks performed better than larger capitalisation stocks. The Technology sector, like it was globally, was the main benefactor, with Communication Services and Financials also doing well. Utilities, Consumer Staples, and Healthcare lagged the others.
May was another volatile month for global bond markets. Some concerns around US fiscal sustainability, and Moody’s cutting its US sovereign rating to Aa1 (aligning itself with the other major credit rating agencies), led to sovereign bond yields rising, delivering a small negative return for bond funds in May. The New Zealand Reserve Bank reduced the OCR by another 25 basis points in May, down to 3.25%. However, they did signal that there may only be one or two further cuts to occur this year.
The World Equity Fund returned 4.64% during May, with almost all global sharemarkets rebounding from the February, March and April losses. This, however, was slightly offset by a strengthening New Zealand dollar against the US dollar (a stronger NZ dollar reduces the valuation of offshore shares when reported back in the Fund). Stocks that rebounded the most during May were Nvidia +23%, Disney 22%, Tesla +21%, Meta +17%, Microsoft +16%, Caterpillar +12%, and Amazon +10.5%.
The Fund is now slightly underweight US equities, although they still make 70% of the portfolio (versus market weighting of 74%). The Fund is starting to overweight Europe, and Asia. The largest exposure by sector is still Technology, at 24%, with the focus on Generative AI & Digital Advertising, Cybersecurity, Datacentres, Cloud Infrastructure, Semiconductors, and Networking.
The Australasian Equity Fund returned 4.33% during May. Both the New Zealand and Australian sharemarket performed well. Key sectors for the month were Technology, Energy, Communication Services and Financials in Australia, and Industrials, Communication Services and Real Estate in New Zealand. The Fund has its main sector weightings to Healthcare 22%, Industrials 21%, Utilities 16%, Communication Services 12% and Financial Services 10%.
Stocks to standout in the month were Mainfreight +26.6%, Macquarie Group +12.8%, Xero +12.2%, Freightways +10.2%, Goodman Property Group, Kiwi Property & Precinct Properties all +9%, and several of the Australia small cap companies we invest in via Dimensional Australian Sustainability Fund.
The World Bond Fund return was –0.31% during May. There was positive news as most central banks continue to lower official cash rates. However, concerns around debt sustainability on sovereign bonds rose, and high deficit countries becoming vulnerable to a sell-off, led to a negative return for global bonds. The Fund had some protection against this, by holding about 20% of its assets in short-dated securities. These securities were not affected from the rising longer-term yields. In fact, they provided a positive return for the fund.
The New Zealand Bond Fund return was also –0.31%. As with the World Bond Fund we had the positive news of the Reserve Bank of New Zealand reducing the OCR by 0.25% and forecasts of one to two further cuts, and the negative outlook around debt sustainability and how this could impact on New Zealand bonds, and the market in general.