Welcome to our monthly investment catch up. In this edition we discuss what when well in the markets last month, what captured the attention of our investment team, and we share insights into some of the actions the investment team took in the portfolios.
What went well in July?
- 🇳🇿 NZ share market moved higher – The NZX 50 rose during July, with several large companies in healthcare and utilities helping to lift the index.
- 🎢 Economy performed better than expected – GDP growth came in stronger than forecast, lifting confidence in the outlook for jobs and spending.
- 🌍 Exports remained strong – Dairy, meat, kiwifruit and tourism earnings stayed healthy, supporting the wider economy.
US markets reached new highs – The S&P 500 and Nasdaq climbed to record levels, helped by strong technology earnings and optimism around AI. This boosted KiwiSaver funds with offshore shares.
Technology sector continued to perform – Global leaders like Microsoft, Meta and Nvidia delivered strong results, lifting global market sentiment.
What captured our attention?
- ⚖️ Reserve Bank’s next move – With inflation easing but still above the long term average, markets are watching closely to see if the RBNZ hints at any rate changes.
- 🌍 Impact of new U.S. tariffs – Any shifts in American trade policy could flow through to global markets, affecting NZ exporters and investment returns.
Strength of the U.S. dollar shifting — After earlier expectations of decline, the dollar is showing renewed strength. That matters for KiwiSaver investors with overseas exposure.
Oil price movements – Geopolitical tensions and OPEC supply changes could push fuel prices up, affecting inflation and consumer spending.
Investor sentiment – With markets at or near record highs in some regions, we’re watching whether confidence holds or starts to cool.
Market Commentary
Global share markets finished July on a positive note, with US indexes reaching new highs. This was mainly thanks to strong earnings from tech and AI companies, which lifted investor confidence. Early hopes for better trade relations helped too, although some late-month tariff announcements reminded everyone that risks remain.
Emerging markets also did well, supported by growth in Asian tech sectors. Here in New Zealand, the NZX 50 rose about 1.3%, following the global trend. The Reserve Bank held the Official Cash Rate steady at 3.25%, hinting that a future rate cut might be possible if inflation keeps easing.
Bond yields moved slightly lower, which helped fixed income returns. Commodity prices were mixed and energy stayed strong, but copper and some farm products fell due to softer demand forecasts.
Investors stayed optimistic overall but cautious. They’re watching company earnings closely and keeping an eye on any signals from central banks. Looking ahead, key things to watch are trade talks, economic data from the US and China, and any changes in interest rate policies.
With the economy showing both positives and uncertainties, we might see some market ups and downs in the coming weeks, but there are still good opportunities for investors willing to stay patient.
What this means for your portfolio?
This month, we increased protection on the portion of our portfolio invested in Australian dollar-denominated assets. Currency movements can have a meaningful impact on investment value, and the Australian dollar has faced increased volatility. By adding protection, such as currency hedging or reallocating risk, we aim to reduce the potential impact of unfavourable exchange rate changes. This helps preserve capital and provides clients with more stable and predictable investment outcomes.
Our current exposure to offshore assets, which are denominated in foreign currencies, remains well positioned. We’re comfortable with how these investments are performing and have made no changes to those allocations this month.
We also adjusted several holdings and allocated funds into term deposits, each chosen with specific maturity dates and interest rates to suit our strategy. These moves are based on ongoing analysis of interest rate trends and potential policy decisions, particularly from the Reserve Bank of New Zealand.
We regularly monitor our entire portfolio and remain flexible. When opportunities arise or risks shift, we’ll adjust the portfolio, whether that’s individual assets or the overall mix, to align with our clients’ goals.
The New Zealand Anglican Church Pension Board trading as Anglican Financial Care is the manager and issuer of Christian KiwiSaver Scheme, The Retire Fund, and the New Zealand Anglican Church Pension Fund. Product Disclosure Statements and Fund Updates are available on the Documents page of the AFC website (Pension Fund and The Retire Fund) and https://www.christiankiwisaver.nz/documents/ (Christian KiwiSaver Scheme).
