Kia ora,
As we’re well and truly into the colder months of 2023, I hope this update finds you somewhere warm. It’s been another big quarter for Aotearoa, as we enter the first official recession since 2008. This has kept the markets busy, but we’ve also got good news to share with you.
In our last update I introduced myself to you as the Acting CEO of Smartshares while we searched for our next leader, and it gives me great pleasure to announce that we have finished our search. Anna Scott has been appointed as the new CEO of Smartshares Limited, and we are excited to welcome her to the team in September. Anna is a markets professional who will be joining us from Hobson Wealth, where she has been Chief Operating Officer since 2019. It’s been a privilege to lead Smartshares in the interim, and I’m looking forward to seeing Anna continue the strong growth we’ve been celebrating.
Another quarter, another celebration
A few weeks ago we achieved another huge milestone – launching 5 all-new Smartshares ETFs to market. Along with increasing our competitive investment offer to Smartshares investors, these new products also represent growth in our partnerships with external fund managers and index providers. Later in this update you’ll find the full list, and how to invest, should these suit your investment portfolio.
Remaining cautious in market
Aotearoa isn’t the only country facing a recession, and while global inflation has seen a downward trend this quarter there is still volatility to manage in markets. As long as banks maintain their high interest rates, inflation will continue to decline. However, prolonged high interest rates can do more harm than good, and I’m consistently impressed at how our team is managing your future amidst that uncertainty. This issue’s market breakdown discusses how further declines in large sectors are coinciding with some indices returning record highs, which also highlights the risk balance we’re striking. As always, we also encourage you to set your investment strategy to match your investment time frame and your attitude towards risk too.
Want to change your investment strategy and view regular updates on your investment portfolio? Register and login to our member portal and SuperLife app at my.superlife.co.nz to get your account balance in minutes. If you have any questions or want to talk to our team, please don’t hesitate to get in touch on 0800 27 87 37.
Graham Law
Acting CEO, Smartshares
Fund spotlight: Meet Smartshares 5 new ETFs
At the end of June we celebrated the launch of 5 new ETFs. You now have more options to build your future with Smartshares than ever before.
We’ve launched a new offering in our ESG range (environment, sustainability and governance) and all-new Hedged and Bond Market ETFs. Meet our new investment solutions:
- Smartshares US500 (NZD Hedged) ETF
- Smartshares Global Government Bonds ETF
- Smartshares Global Infrastructure ETF
- Smartshares Global Property ETF
- Smartshares Australian Equities ESG ETF
Not sure what ESG, Hedged and Bond ETFs mean? Head to our Facebook or Instagram for the low-down on these investment terms.
Check out Smartshares new ETFs and see which one is right for you: Smartshares Funds Range
Visit our website for ways to invest.
Painting the office pink
Every year Aotearoa recognises and celebrates Pink Shirt Day, and the Smartshares team stood together with our NZX whānau to do our part for this occasion. We proudly paraded the pink to celebrate our diversity, and to promote kindness and inclusion everywhere.
Pink Shirt Day is an important event to show bullying has no place in our schools, workplaces and communities. The Wellington NZX/Smartshares office hosted a pink bake-off to show their support, which featured stunning sweet and savoury treats from different cultures.
All donations from this event went to The Mental Health Foundation, who are working to stamp out bullying all around Aotearoa. Learn more about Pink Shirt Day here: https://pinkshirtday.org.nz/
Team spotlight: Introducing our Product team
Have you ever wondered who’s behind our investment products? Meet our Product team. Led by our Head of Product, Leon Dillicar, they’re all based in our Auckland office alongside our Investment, Customer and IT teams.
Their day-to-day consists of ensuring our funds are performing at their best, keeping on top of compliance and working to create more options for you to build the future you want. As we launched our 5 new ETFs, it was great to recognise the long, hard work they poured into delivering these new products for our investors.
Earlier this year we were so pleased to welcome Jack to the team as a Product Data Analyst, and they’ll have more new team member news to share next Quarter after the current Product Manager vacancy is filled.
From left to right: Jonathon Skinner, Leon Dillicar (Head of Product), Jack Mahoney and Wayne Hirt
The Market Breakdown: The rises and falls of banks, inflation and returns
We were incredibly proud to take home the Fund Manager of the Year award at the Research IP awards for 2022. We were selected from a pool of all fund managers who were a finalist in another award category, who consistently performed across all products, and who met a broad range of criteria covering governance, philosophy and process, risk management, and fees amongst others. We are also proud to have taken home the Longevity Award for our Smartshares US 500 ETF, Global Equities Fund of the Year for the Smartshares US 500 ETF fund and the Australian Equities Fund of the Year for the Smartshares Australian Top 20 ETF fund.
Market Update
Increased risk appetite pushed global equity markets higher over the quarter, with the MSCI World (NZD) Index making a return of 9.1% and rising to record highs. While investors continued to be captivated by the hype around recent developments in Artificial Intelligence (AI), which initially saw spectacular gains across large-cap tech names, there was a clear rotation into cyclical (or trending) segments of the market later in the quarter. While resilience was seen across equities, global fixed income markets continued to see elevated volatility. Positive macroeconomic data, and persistent inflation across developed economies, saw fixed income investors reduce recessionary risks, which caused a distinct rise in government bond yields - notably for the UK, US, AU and NZ. The Bloomberg Global Aggregate (NZD Hedged) Index rose 0.1%, while here in Aotearoa corporates outperformed government bonds, respectively rising 0.4% versus a decline of 1.4%.
Across the global regions, equity market performance was largely sector driven, with information technology and communications substantially outperforming sectors such as utilities, energy, and real estate. Top performers were generally large-cap technology companies based in the United States, who have ample financial and technical resources to be at the forefront of generative AI development. During the earnings reporting season of Q1 in 2023, companies such as Microsoft, Alphabet, and NVIDIA, delivered a persuasive message regarding their plans on how to capitalise on AI opportunities, further lifting both investor optimism and share value. The technology-focused NASDAQ 100 Index rose 15.4% over the quarter and is up 39.4% for the first six months of the year - a new record run.
Draining the wells
Real estate stocks continued to underperform, largely on concerns that rising interest rates will put developers and owners under pressure from refinancing challenges and falling revaluations. The energy sector faced pressure too as oil prices continued to trend downwards. The global Brent oil price benchmark declined a further 6.1% over the quarter, as disappointing economic data in China implied a softer outlook for industrial-based oil consumption. On the supply side, Russia continued its unrelenting, high-volume export of their heavily discounted oil into Indian and Chinese markets. This was bad news for the regions with relatively high exposure to commodity sectors (UK, Canada and Australia), and made them the weakest performers over the quarter.
Developments in global macro (economic or political events) supported lower risk sentiment, as the much-anticipated rise in unemployment across major economies has yet to materialise. Thanks to resilient labour market dynamics and strong wage growth, the rapid interest rate hikes over the last one and a half years haven’t had much of an impact on consumers, with spending remaining strong. Inflation has stayed on a downward trend globally, largely due to base effects from oil prices peaking this time last year. Core inflation measures were slightly more persistent and remained well above central bank targets. Most of those banks continued to raise rates over the quarter, signalling that inflation is still too high and that more hikes could come. With economic data generally surprising to the upside, and the avoidance of a recession or sharp rise in unemployment, the “soft landing” scenario has increasingly become the market consensus – which is great news for you.
Reading the market radar
The sheer strength of this year’s rally in equity markets is remarkable considering the proverbial “wall of worry” that has confronted investors throughout the year. Seemingly, investors have brushed off several high stress episodes such as a major global banking crisis, elevated and persistent inflation, rapid tightening of monetary conditions, a lethargic reopening of China and a continuation of war in Ukraine.
It seems equity markets have increasingly priced in high odds of a “soft landing” scenario. Where central banks manage to achieve their inflationary goals (i.e., getting inflation back to around 2%) while simultaneously avoiding pushing the economy into a recession.
However, if trends do reverse, where inflation once again starts to accelerate due to rising wage costs, excessive government spending or an external event, we would expect both equities and fixed income assets to suffer, with equities feeling most of the pain. Given the balance of these risks, we remain cautious on equities and are maintaining a slightly below-target exposure.
World indices at a glance:
(Data source: Bloomberg, compiled by SuperLife)
Global assets: major market movements over the last 12 months
(Source: Bloomberg)
SuperLife KiwiSaver Diversified Funds as at 30 June 2023
Note: Past returns are not a reliable indicator of future performance. Returns are for the specified periods ended 30 June 2023, for a SuperLife KiwiSaver member, net of fund charges and taxes. The SuperLife Default KiwiSaver fund is only available to SuperLife KiwiSaver members
The annual returns of each of the above diversified funds in SuperLife KiwiSaver (after fund charges and tax) for each of the last 10 years ending 31 March and the annual returns of each fund's applicable market index are available in the most recently published fund update for the fund. Fund updates for the SuperLife KiwiSaver Scheme can be accessed here.
Ways to invest
SuperLife offers access to a range of funds across different sectors and country exposures, so investors can create portfolios tailored to their needs.
Our Ethica fund is a socially responsible fund with investments in a balance of income and growth assets.
With our SuperLife Age Steps option, we automatically set the proportion of your investment in income and growth assets based on your age. This means as you get older, the proportion of your investment in more volatile growth assets will be reduced, lowering the expected size of the ups and downs in the value of your investment.
If you would like to find out more about how SuperLife can help with your investments, get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it. or phone 0800 27 87 37.
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. SuperLife 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.
