Welcome to our monthly investment catch up. In this edition we discuss what went 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 August?
- Interest rate cut boosted optimism – The Reserve Bank reduced the Official Cash Rate to 3.00% in August, helping with mortgages, loans, and overall confidence in the economy.
- NZ share market showed modest gains – The NZX 50 rose 0.8% for the month, reflecting cautious optimism among KiwiSaver members.
- Currency exchange rates showed some stability – The New Zealand dollar held relatively steady against major currencies, reducing uncertainty for imports, exports, and offshore investments.
- Global trade showed tentative recovery – Demand in Asia improved, but global trade remains fragile due to tariff tensions.
- Global share markets rose – Gains in Europe and Japan helped investors grow their overseas investments, despite mixed performance in the US.
What captured our attention?
- China’s economy slowed – Weaker growth in China reduced demand for New Zealand exports like dairy, meat, and logs.
- Fuel and food costs stayed high – Elevated oil and gas prices, along with persistently costly groceries, kept pressure on inflation and household budgets.
- US–China trade tensions – Ongoing disputes between the two largest economies unsettled global markets and affected NZ exporters.
- Australian economy cooled – As New Zealand’s largest trading partner, slower growth in Australia raised concerns about the potential spillover effects on our own economy.
- Longer term bond yields stayed high – Rising yields have reduced the value of existing bonds, which can lower returns for conservative funds.
Market Commentary.
August was a month of mixed results for investors. Global share markets mostly held firm, with US tech and AI companies continued to outperform. However, higher bond yields caused some ups and downs, so not all parts of the market moved in the same direction.
Emerging markets were uneven. Slower growth in China and ongoing trade tensions with the US made it harder for global markets and New Zealand exporters. Some parts of Asia’s technology sector performed well, providing bright spots. Here in New Zealand, the NZX 50 rose modestly, supported by solid local company results and improving investor confidence.
Bond yields stayed high, which lowered the value of existing bonds and affected more conservative KiwiSaver funds. Commodity prices were mixed: energy costs spiked at times, increasing costs for households and businesses, while dairy and other exports were slightly softer due to lower global demand.
Investors are staying cautious but engaged. Many are watching developments in China, Australia, and the US, alongside inflation trends and company earnings. The Reserve Bank’s recent rate cut has given a boost to confidence, but uncertainties remain, particularly around energy costs and global trade.
Looking ahead, August’s mixed results show why it’s important to understand the mix of assets in your KiwiSaver fund, so you know how your investments may react to global and local developments.
What this means for your portfolio.
This month, our investment team sold selected New Zealand shares that had performed well but now appeared overvalued relative to our assessment of their true worth. This was a positive move for clients, as it allowed us to lock in past gains and reduce the potential risk of future price declines in those shares.
One of the key strengths of active management is flexibility. Rather than holding a fixed equities portfolio, we actively monitor market trends, company performance, and broader economic conditions. When we think a share is overpriced or the risk is too high, we act to adjust our holdings. This helps us adapt to changing circumstances and move capital toward opportunities that better support our long-term goals for members.
During the month, we held our quarterly Investment Committee meeting. Our Investment Committee helps ensure our decisions are well-informed, balanced, and aligned with the long-term goals of each fund. It brings together a separate set of experienced voices to review our approach, assess risks, and guide strategy. For investors, this means greater confidence that their money is being managed thoughtfully, with oversight and accountability. The Committee also helps maintain consistency and values-based decision-making, especially when navigating complex or changing economic conditions.
Overall, these actions reflect our commitment to actively managing your portfolio with care, discipline, and a long-term focus.
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://christiankiwisaver.nz/documents/ (Christian KiwiSaver Scheme).
