Giving you the highlights from the last three months at Smartshares and the markets
In this issue
From Anna’s desk:
How a new year is bringing exciting new plans
Fund Spotlight:
Why getting ready for retirement is easier than you think
What’s New:
Announcing our competition winners, and some big news
Quarterly Highlights:
Looking back on the successful year that was
The Stocktake:
Three months of turning tables
Kia ora koutou,
I’m sure many of you recognise the scene my household saw a few weeks back: the annual disbelief at breakfast that another year’s gone so fast. But writing to you reminds me that those moments don’t last, and I’m so pleased to start 2024 by wishing you a very Happy New Year! After a challenging year, I hope you got to enjoy a relaxing festive break doing what you love.
Here at Smartshares, 2024 is already shaping up to be an exciting and eventful year. That’s only possible because of the pattern of continued success and milestones we kept building in 2023, and it gives me deep pride as a leader to look back on some of the biggest ones later in this issue.
My first day at the start of September still feels like it was only last week, but since then I’ve had plenty of special moments to look back on – the best of which were getting to spend time with so many of you. In the last issue I talked about our upcoming Investor Seminars, and in November we hit the road to Dunedin, Christchurch, Auckland and Wellington to deliver insights on both the global markets, and your future with SuperLife.
(Our Christchurch Investor Seminar gets underway at The Piano.)
It was wonderful to get time with our investors around Aotearoa, and have a chance to meet you and hear what’s important to you and your whānau. Thank you so much to all of you who took time out of your busy lives to come along, we’re already excited for the 2024 series coming in spring!
Earlier I mentioned that Smartshares is looking to continue our track record of strong success and milestones this year. We’re still nailing down our timelines for our 2024 plans so I don’t have all the details to share yet. However, some of our delivery goals for 2024 come directly from your feedback, and what matters to you as our investor community. I can’t wait to show you more about that in the coming updates.
On behalf of your dedicated Smartshares team, I want to wish you and your whānau all the best for the year ahead – we’re so glad to be part of yours.
Ngā mihi nui,
Anna Scott - CEO, Smartshares
Fund spotlight
Age Steps: A retirement solution for those who want to set and forget
Have you been thinking about the best option for your retirement? SuperLife’s Age Steps investment solution could be what you’re looking for.
Age Steps lowers the risk level of your investment gradually as you get older, so you can easily access your funds when you need to.
You can:
- Be optimised for every stage: Age steps maximises the opportunity your age gives you by changing the mix of growth and income assets in relation to your stage in life.
- Set and forget: We’ll adjust the proportion of income and growth assets each year, so you don’t have to change a thing.
- Prepare for your life: We’ll continue to invest your savings that you aren’t using at retirement, and grow them even further.
What’s new?
Were you a competition winner?
Last month we announced the winners of our Find My Fund competition, where all members who entered had the chance to grab 1 of 10 $200 Prezzy Cards. To enter, we invited members to complete our Find My Fund tool, where you can check if you’re invested in the right fund for your future.
Congratulations to our 10 winners, it was a pleasure to share the good news with you before Christmas! If you want to be in the draw for our next competition, make sure your contact details are up to date so you don’t miss out – check yours in minutes on our SuperLife member portal.
Bidding a fond farewell
Late last year we were sad to learn that our Chief Customer Officer, Donna Mason will be leaving us in February for a fantastic new opportunity.
You’ll know her name from our communications, and she’s been lucky enough to meet so many of you too. What you may not know is that Donna has been a phenomenal champion for all of you, and has been a driving force in growing our business around our investors and their future.
Donna has been a part of so many of our milestones: becoming a default KiwiSaver provider, surpassing $10 Billion in funds under management, winning industry-leading awards and acquiring the ASB Superannuation Master Trust.
Our focus on you, our investors will remain unchanged. Your dedicated customer team will keep delivering amazing service, and the only everyday change you’ll notice is on your communications - those will now come from our new General Manager of Operations, Scott Lumsden.
On behalf of the entire Smartshares team and all of our investors, thanks for everything, Donna.
We don’t want you to miss a thing
Checking your contact info is up to date is easy. Simply login to our member portal at my.superlife.co.nz, and we’ll make sure you hear about the exciting things coming soon.
Quarterly Highlights
2023’s big milestones, and a bigger team
As we mentioned in the above update, we achieved another huge milestone in 2023: $10 billion in funds under management. After growing from the $2.7 billion we were managing five years ago, we are honoured to be trusted with the future of so many New Zealanders.
One of the drivers of that growth was welcoming QuayStreet Asset Management to the Smartshares family from Craigs Investment Partners. This acquisition brought an expanded product offering and five new talented team members.
We also completed the transition of the ASB Superannuation Master Trust to the SuperLife Superannuation Master Trust, bringing 9 funds and over 16,000 new members to our investor community. This was a huge project for our team, and we’ve loved being able to welcome so many new investors to SuperLife.
With a range of 40 ETFs to choose from, we’re giving the people of Aotearoa more options to create their future, their way. You can access all 40 ETFs directly smartshares.co.nz, or via an online share trading platform, broker or financial adviser.
Our moment of the year: launching 5 new ETFs
What was our biggest moment of last year? That’s easy: at the end of June we celebrated the launch of 5 new exchange traded funds (ETFs), giving you more options to build your future than ever before.
We launched a new offering in our ESG range (environment, sustainability and governance) and all-new Hedged and Bond Market ETFs:
- Smartshares US500 (NZD Hedged) ETF
- Smartshares Global Government Bonds ETF
- Smartshares Global Infrastructure ETF
- Smartshares Global Property ETF
- Smartshares Australian Equities ESG ETF
Our 2023 Investor Seminar series
In November we wrapped up the year by bringing back our popular Investor Seminar Series, taking market insights and updates on our business to investors across Aotearoa.
These are special to us, because it lets us spend time with what we value beyond anything: you. Thank you to everyone who attended in Dunedin, Christchurch, Auckland and Wellington (the latter of which were sellouts!), it’s always a pleasure to spend time sharing what matters with you.
In case you missed out on what we shared, don’t worry – there’s a recording of our Auckland seminar that you can watch here at any time.
We’re already excited for the 2024 series, so stay tuned for your chance to get a seat this year.
The Stocktake
Following a tumultuous third quarter last year, risk appetite rebounded in November and December as the pressure of inflation kept fading. Major central banks reinforced that sentiment by beginning to echo the now-firm base case assumption for the market: the current hiking cycle is well and truly over, and broad easing of monetary conditions is likely to begin in 2024. This shift in narrative increased risk appetite, which saw global equity markets surge higher as many major benchmarks finished the year near or above record highs. The MSCI World (NZD) Index was one example, returning 5.7% for the quarter and ending 2023 with a 23.7% return, however the Bloomberg Global Aggregate (NZD Hedged) remains negative over 2 and 3-year rolling periods, despite the 5.7% return this quarter. Considering how the year was marked by widespread concerns of looming recessions, major banking failures and numerous geopolitical flare-ups, this was a remarkable outcome. The positive sentiment perked up more than just indexes, with bonds globally staging one of the best 2-month rallies in decades - a much-needed reprieve for wearied bond investors.
Flipping last quarter’s narrative
Across individual sectors, almost all market parts delivered strong returns except for Energy, which declined 4.0% thanks to tumbling oil prices. Over the quarter, the WTI price fell from US$90/barrel to $72/barrel, predominantly due to concerns that recent OPEC+ production cuts wouldn’t be enough to balance higher supply from US shale (an unconventional oil extracted solely in the US) and global petrochemicals consumption seeing a weaker demand forecast. Top performing sectors were those that are most-sensitive to interest rates, such as Real Estate and IT which rose 18.1% and 17.6% respectively (in USD terms). The ‘risk-on’ mood impacted currency markets meaningfully. The USD, which tends to counteract any effects of the economic cycle, was one of the worst major currency performers. Expectations for rate cuts in the US for next year ramped up, causing the Dollar Spot Index to finish 4.6% lower while impacting Emerging Market equities - which historically have a strong inverse relationship with USD - positively. The MSCI Emerging Markets Index (USD) rose 7.9%, despite being hamstrung again by poor performance from Chinese equities. The Chinese CSI 300 Index fell 6.8%, however this was more than offset by exceptionally strong performance from Latin American equities, which rose 17.8%.
Growth against the grain
Fixed income markets continued to show higher-than-normal levels of volatility, but it still resulted in solid positive returns. In October, US 10-Year Treasuries rose and briefly flirted with 5% yields, their highest level in 15 years, but they quickly retraced back to below 4% following more signalling of lower interest rates and looser monetary policy from the US Federal Reserve. The latest ‘dot plot’ chart, which shows the Federal Open Market Committee projections for the future Federal Funds Rate, moved the 2024 median estimate 50bp lower (three cuts in total) from the previous September’s dot plot. At the riskier end of the fixed income spectrum, corporate bonds fared even better than government bonds, with high yield securities outperforming investment grade as spreads continued to tighten. That was all despite continued evidence of a slowing growth outlook, and wraps up a highly eventful quarter.
Are you paying too much/little tax?
If you think you paid more or less tax than you should, your Prescribed Investor Rate (PIR) could be out of date. Checking that your PIR is right for you is simple, just login to our member portal at my.superlife.co.nz, and get yours up to date in minutes.
Finance in full
World indices at a glance
| EQUITIES | Q4 2023 RETURN | 1 YEAR RETURN | 3 YEARS (P.A) RETURN |
|---|---|---|---|
| International | |||
| FTSE Developed All Cap Index | 11.7% | 23.6% | 7.0% |
| FTSE Emerging Markets All Cap China A Inclusion Index | 6.8% | 9.5% | -2.9% |
| S&P 500 Index | 11.7% | 26.3% | 10.0% |
| Australasian | |||
| S&P/NZX 50 Gross Index | 4.2% | 2.6% | -3.5% |
| S&P/ASX 200 Index | 8.4% | 12.4% | 9.2% |
| FIXED INTEREST | Q4 2023 RETURN | 1 YEAR RETURN | 3 YEARS (P.A) RETURN |
|---|---|---|---|
| International | |||
| Bloomberg Global-Aggregate Index | 8.1% | 5.7% | -5.5% |
| US 10-year government bond yield (%) | 3.9% | 4.6% | 3.9% |
| New Zealand | |||
| S&P/NZX A-Grade Corporate Bond Total Return Index |
5.0% | 7.4% | -0.8% |
| NZ 10-year government bond yield (%) | 4.3% | 5.3% | 4.5% |
(Data source: Bloomberg, compiled by SuperLife)
Global assets: major market movements over the last 12 months
(Source: Bloomberg)
SuperLife KiwiSaver Diversified Funds as at 31 December 2023
| FUNDS | 3 MONTHS | 6 MONTHS | 1 YEAR | 3 YEARS (P.A) | 5 YEARS (P.A) | 7 YEARS (P.A) |
|---|---|---|---|---|---|---|
| Income | 4.0% | 2.9% | 4.1% | -1.4% | 1.0% | 1.4% |
| Conservative | 4.9% | 3.4% | 7.3% | 0.6% | 3.1% | 3.2% |
| Balanced | 5.5% | 3.4% | 9.4% | 2.2% | 5.3% | 4.9% |
| Default | 5.0% | 3.5% | 11.4% | - | - | - |
| Ethica | 6.3% | 4.5% | 11.4% | 2.4% | 6.8% | 5.6% |
| Growth | 6.0% | 3.6% | 11.2% | 3.3% | 6.5% | 5.8% |
| High Growth | 6.5% | 3.9% | 12.7% | 4.4% | 7.7% | 6.8% |
(Note: These figures are representative of the SuperLife KiwiSaver Scheme. Returns displayed account for fund charges and tax at 28%, but your tax rate may be lower. Past returns are not a reliable indicator of future performance.)
This information does not constitute financial advice and does not take account of personal circumstances; rather, it is designed to illustrate possibilities. As with all investment decisions, what might be the right strategy over the medium or longer term may not pay off over the very short term. No one can consistently predict what will happen over the short term. Those acting upon the information in this newsletter do so entirely at their own risk. Smartshares does not accept liability for the results of any actions taken or not taken based on this information. While every effort has been made to ensure accuracy, no liability is accepted for errors or omissions in this newsletter.
