Highlights and news from the past quarter at SuperLife
In this issue
From Anna’s desk:
Smartshares rebrands as Smart, setting the foundation to deliver on our core belief that the wise invest Smart.
Fund Spotlight:
Smart has launched four new exchange traded funds (ETFs) in collaboration with iShares.
Investing 101:
The #1 golden rule of investing and the power of compounding returns on your long-term investments.
The Stocktake:
In the third quarter, interest rate cuts and easing inflation saw gains in both equities and bonds.
Kia ora koutou,
You may have seen the new branding for Smartshares, the manager of the SuperLife schemes – now named “Smart”. Our rebrand is not just about the selection of a new name and logo. We are consolidating our well-known SuperLife and Smartshares ranges of investment options into a single trusted source.
For me, as CEO, becoming Smart is as much about our strategy and customer focus, as it is about our own people. Being Smart is aspirational, it will shape who we are and how we work alongside you, your company or adviser and our investment partners.
Our new brand represents our core belief that the wise invest Smart.
What this means for SuperLife members
For SuperLife members, this change requires no action on your part. Look out for a refreshed SuperLife brand to start taking shape in 2025, becoming Smart.
For you, our customers, becoming Smart is our commitment to making investing easy to access with a wide selection of funds to help you make wise choices and build long-term savings, no matter who you are or where you are on your investment journey.
On behalf of your dedicated Smart team, I wish you and your whānau all the best as we head to the end of the year.
Ngā mihi nui,
Anna Scott - CEO
Smart (Smartshares Limited)
Fund spotlight
Saving for a rainy day? Smart ETFs offer an easy avenue to investing
Whatever you are saving for, we can help. Smart has launched four new exchange traded funds (ETFs) in collaboration with iShares by Blackrock, one of the world’s largest ETF providers.
We’ve recently launched the Smart S&P/NZX 20 ETF, and three more new ETFs in collaboration with iShares, bringing bitcoin, gold and US technology ETFs to the New Zealand market. These new funds reflect global investment trends and give you easy access to thematic and international investment options.
The new ETFs listed on the NZX Main Board are:
- Smart Bitcoin ETF (BTC)
- Smart Gold ETF (GLD)
- Smart US Technology (NZD Hedged) ETF (UST)
- Smart S&P/NZX 20 ETF (NZT)
Discover our new Smart Bitcoin and Smart Gold ETF here »
The Smart Exchange Traded Funds are issued by Smartshares Limited (Smart). The product disclosure statements are available at smartinvest.co.nz.
Investing 101
The power of compounding returns
Did you know that compounding is one of the most powerful tools for growing your savings over time?
By earning returns on both your initial investment and the returns already accumulated, your savings can grow faster. This is a powerful ‘snowball effect’ for building wealth over time.
To make the most of compounding, it's important to review your contributions regularly – small increases in contributions can lead to bigger gains down the line.
The #1 golden rule of investing
Know your 'why' before your 'how'
Setting clear objectives results in smarter investing. Start with your goals. Are you saving for retirement, education, travel? Understanding your time frame and risk tolerance will help you clarify what mix of investments is most suitable for you.
Our latest blog dives into the five golden principles of investing, covering the essential strategies to help you grow your wealth wisely.
The Stocktake
As we reflect on the quarter ending 30 September 2024, it’s clear that recent events are already re-shaping the investment landscape. With Donald Trump and the Republican Party winning the US election, the US share market hit a new high. There will be interesting times ahead but to put things in perspective, we will now turn to the last quarter.
Most major markets recorded positive returns over the third quarter, albeit with higher levels of volatility and increased divergence between sectors. Weaker than expected jobs data in August and higher levels of unemployment led investors to fear that the U.S. Federal Reserve (Fed) had left it too late to start cutting rates, which in turn would mean an increased likelihood of a hard landing.
Central banks began the quarter holding interest rates steady with the Fed leaving rates unchanged at 5.25-5.50%. Weak economic data raised market expectations for a reduction in rates before the end of 2024. This eventuated in September with the Fed kicking off its rate-cutting cycle by delivering a 50-basis point reduction in its target rate. The Bank of England and the European Central Bank also delivered rate cuts over the quarter.
Markets began pricing in further easing in monetary policy with expectations for additional rate cuts by the end of the year.
Last quarter also saw increased market volatility in currency markets with the New Zealand Dollar initially declining more than 3% against the US Dollar, before rebounding in the last two months of the quarter and ending 4.5% higher. Over the period, funds with currency hedging would have benefitted.
International Equities
The S&P 500 Index posted gains in July, August and September to end the quarter 5.5% higher. All sectors, apart from Energy, posted positive returns. Top performing sectors included Utilities and Property returning 18.5% and 16.3% respectively. The Energy sector declined just over 3%.
Following on from a strong second quarter, emerging markets outperformed developed markets again in the third quarter and continued to claw back some of the relative year-to-date underperformance.
NZ Equities
NZ equities bounced back from a lacklustre start to the year with an impressive September quarter, as the S&P/NZX 50 Index increased by more than 6.3%. Only twelve companies in the index saw their share price fall over the period, with more than half increasing by over 10%. The strongest performer was Arvida Group, gaining almost 80% following a July announcement recommending the sale of the business to private equity at a substantial premium. Shareholders voted in favour of the sale in late September and the company left the exchange in mid-October. Spark was the worst performer by some distance, falling 27.2% as the market reacted poorly to its FY24 results having already seen the company downgrade its earnings guidance earlier in the year. Market activity spiked during the quarter with two significant capital raisings by Auckland Airport ($1.4 billion) and Fletcher Building ($700 million), the former being the largest ever on the NZX.
Cash
In July, the Reserve Bank of New Zealand noted that its tight policy setting has flowed through to demand more than expected, and that inflation was expected to hit the target range in the second half of this year. The central bank delivered a cut to the Official Cash rate in August, the first in four years. They have since made a further cut to the OCR in October.
NZ Fixed Interest
We saw strong returns in the New Zealand bond market as interest rates followed global markets lower (yields and price move in opposite directions). Government bonds fared marginally better than corporate, with the benchmark S&P/NZX NZ Government Bond Index returning 3.9% and the S&P/NZX A-Grade Corporate Index returning 3.8% over the three-month period.
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Finance in full
World indices at a glance
| EQUITIES | Q3 2024 RETURN | 1 YEAR RETURN | 3 YEARS (P.A) RETURN |
|---|---|---|---|
| International | |||
| FTSE Developed All Cap Index | 6.6% | 31.9% | 8.7% |
| FTSE Emerging Markets All Cap China A Inclusion Index | 10.6% | 27.3% | 2.3% |
| S&P 500 Index | 5.9% | 36.4% | 11.9% |
| Australasian | |||
| S&P/NZX 50 Gross Index | 6.0% | 10.0% | -2.2% |
| S&P/ASX 200 Index | 7.8% | 21.8% | 8.4% |
| FIXED INTEREST | Q3 2024 RETURN | 1 YEAR RETURN | 3 YEARS (P.A) RETURN |
|---|---|---|---|
| International | |||
| Bloomberg Global-Aggregate Index | 7.0% | 12.0% | -3.1% |
| US 10-year government bond yield (%) | 3.8% | 4.4% | 4.6% |
| New Zealand | |||
| S&P/NZX A-Grade Corporate Bond Total Return Index |
3.8% | 10.9% | 2.0% |
| NZ 10-year government bond yield (%) | 4.2% | 4.7% | 5.3% |
(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 September 2024
The investment returns shown below are for the specified periods ended 30 September, for a SuperLife KiwiSaver Scheme member (after fund charges and tax). The SuperLife Default Fund is only available to members of the SuperLife KiwiSaver Scheme.
| FUNDS | 3 MONTHS | 6 MONTHS | 1 YEAR | 3 YEARS (P.A) | 5 YEARS (P.A) | 7 YEARS (P.A) |
|---|---|---|---|---|---|---|
| Income | 2.5% | 3.0% | 6.7% | -0.1% | 0.4% | 1.3% |
| Conservative | 3.0% | 3.4% | 10.9% | 1.6% | 2.5% | 3.3% |
| Balanced | 3.6% | 3.6% | 14.3% | 2.7% | 4.4% | 5.1% |
| Default | 3.4% | 3.9% | 14.2% | - | - | - |
| Ethica | 4.5% | 4.0% | 15.8% | 3.1% | 5.6% | 6.0% |
| Growth | 4.1% | 4.4% | 17.3% | 3.8% | 5.6% | 6.1% |
| High Growth | 4.3% | 4.2% | 19.6% | 4.6% | 6.8% | 7.1% |
(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.
