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’ performance return in the Scheme were positive. 

2026 to date has produced double digit performance for global equity markets, rewarding those that maintained their KiwiSaver investments in the more aggressive High Growth Fund and Focused Growth Fund, and 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 KiwiSaver Scheme does 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 High Growth Fund had another good month, up 2.71%, and more impressive quarter, up 12.51%. However, under the bonnet the results were mixed. The US megacap stocks underperformed, while the US smaller cap stocks (through the Dimensional Global Sustainability PIE holding) performed strongly. The New Zealand equity allocation added value this month, as did the European stocks and heavy IT sector exposure across the globe, barring the US. 

Leading the way for the Fund were several of our newer additions - Lam Research was up 45.9%, Palo Alto 29%, GE Vernova +28%, Micron +25%, and Vertiv 20.2%. Other big performers were ASML 29%, Caterpillar 28%, TSML 20.4%, JNJ 18.6%, and Home Depot 18%. Closer to home CSL was up 20.4%, Woolworths +15.1%, Wesfarmers +14.8%, and QBE +12.8%. 

The Income Fund recorded a third straight positive month, up 0.59% for June, and 1.63% for the quarter. New Zealand bonds were the standout for the month and the quarter. Globally the news wasn’t quite as cheery. 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 Focused Growth Fund had another positive month in June, up 0.75%, and 14.04% for the quarter. The underlying securities saw a reversal of form in June, with several of the megacap stocks underperforming. For example, Microsoft was down –12.8%, Amazon –7.3%, Meta –6.2%, and Toyota –5.1%. On the flipside, TSML had a stellar month, up 19%. JP Morgan also performed well, up 15.1%, Eli Lilly 14.2% and Visa 10.6%. 

The Cash Fund returned +0.25% for the month of June, consistent with the other two months of the quarter. Short term interest rates remain steady, helping the fund deliver positive daily performance and protection from negative valuations. 

Our Lifestages profiles performed well across the board, with all asset classes providing a positive contribution. Profiles with a higher weighting to growth assets performed better than the more conservative profiles – the returns ranged from +2.41% (0-49 profile) to +1.17% (65+ profile) for June and from 12.75% to 4.67% for the quarter.