International Equities 

Global shares began 2025 on a positive note in January, returning +3.6% in USD terms. While it might appear that the New Year is picking up where 2024 left off, the components of the January rally were different to what we saw last year.

The US market rose less than the global index, up +2.8%, and the much vaunted Magnificent 7 stocks lagged the broader S&P 500. The best performing US sectors were Communication Services and Health Care, while the worst performer was Technology, dragged down by a -10% selloff in last year’s market darling, Nvidia.

Even though Generate’s portfolios are overweight both the US and technology shares, we comfortably outperformed the global index thanks to a raft of positive earnings surprises from key holdings. The big winners were in a diverse range of industries from cruise ships (Royal Caribbean) to streaming services (Netflix) to health care (HCA Holdings).

On the downside, semiconductor stocks sold off sharply in January, a combination of tariff fears and uncertainty in the AI market following the release of China’s DeepSeek latest large language model. These uncertainties are likely to persist in the near term, but we don’t see any slowdown in AI investment levels on the horizon and remain comfortable holding key AI-exposed stocks.

New Zealand & Australian equities

January was a challenging start to the year for New Zealand markets, with the S&P/NZX50 declining by -0.9%. In contrast, Australia’s S&P/ASX200 rose by +4.6%.

Two key factors contributed to the decline in the NZ market: Infratil Limited (-11%) and Fisher and Paykel Healthcare (-2.1%). Infratil experienced a gradual decline throughout the month, with a sharp drop occurring at the end of January following the revelation of China-based DeepSeek. DeepSeek published a paper which, at first glance, gave investors the impression that they had developed AI tools at a significantly lower cost compared to US-based platforms. This led the market to question the future demand for all things AI, including data centres, which form a substantial part of Infratil’s portfolio via their holding of CDC in Australia. Fisher and Paykel Healthcare’s decline came without new developments.

In positive news, Oceania Healthcare increased by +12.3%, and Mercury Energy gained +7.9%. The gains for Oceania were likely influenced by investor optimism that lower interest rates may lead to a rise in residential property prices over 2025. Oceania is exposed to this thematic as their retirement living products are priced based on house prices.

Additionally, a stronger housing market enables potential village residents to sell their homes more easily ahead of moving into a village. Mercury’s gain could be attributed to recovery from index-led selling that affected the stock in December, as investors prepared for a potential exit of Mercury from the MSCI World index. If this event occurs, it could result in a significant number of passive-investors selling the stock.

Returns to the 31st of January 2025 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

Except for the $3 per member per month administration expense that is charged to KiwiSaver members.

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of new funds in May 2022, our original Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance.

Generate’s fund updates can be found here for KiwiSaver Funds and here for Managed Funds.

Top Holdings as of the 31st of January 2025

Generate total Funds Under Management (FUM) as of 31st of January 2025: $6,957,739,402

International Equities 

Global equity markets had a muted month overall in February, falling -0.8% in USD, yet gaining +0.6% in NZD after the Kiwi dollar softened. There was significant dispersion under the surface, however, with European stocks continuing their strong performance of late, rising +4.6% in NZD terms, while US-listed semiconductor companies declined -3.1% and US smaller companies fell -4.0% (both in NZD).

Our best performers in the month were Alibaba (+34.1%) driven by a combination of strong financial results and the ongoing execution of a significant share buyback program, and Eli Lilly (+13.7%), as investors were reassured about consumer demand for their anti-obesity drugs. Pinterest (+12.2%), and European payments business Adyen (+10.9%) also had good months after they reported strong earnings.

Our weakest performer was a new position in e.l.f. Beauty that fell -29.7% in February after its earnings failed to meet market expectations. We believe the market reaction overstates the issues at e.l.f. so we increased our position at more attractive prices.

New Zealand & Australian equities

The S&P/NZX 50 decreased by -3.0% in February, reflecting a challenging month across the board. This weak performance can be explained by an underwhelming earnings season, and comments made by CEOs confirming that the domestic economy has been tough for businesses.

The worst performing domestic company in the Funds was Ryman Healthcare, which dropped -23.9% after announcing a surprise $1 billion capital raise. This is the second raise in recent years, as new management battles to turn around the business. We have been sceptics about the company's strategy, and as a result, the Funds had only modest investments in Ryman. The capital raise was executed at an attractive price and removed the balance sheet risk, so the Funds took advantage and increased their holdings.

Spark was another significant underperformer, dropping -22.0% over the month after releasing a weak set of results that were poorly telegraphed to the market. Management argues that they have been reducing costs, and this will be evident in the second half results, leading to an improvement in financial performance.

The strongest performing domestic company was A2 Milk, which was up an impressive +37.3%. A2’s Chinese infant formula business performed better than expectations, allowing the company to raise guidance.

Fletcher Building also had a strong month, appreciating +18.5%; the company released first half results that were better than feared and published guidance that implied analysts were too conservative for the full year.

Returns to the 28th of February 2025 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of new funds in May 2022, our original Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance.

Generate’s fund updates can be found here for KiwiSaver Funds and here for Managed Funds.

Top Holdings as of the 28th of February 2025

Generate total Funds Under Management (FUM) as of 28th of February 2025: $6,918,736,203

International Equities 

March saw significant weakness in global equities as Trump’s whipsaw tariff policies created confusion and eroded confidence in equities. The US was hit especially hard with the S&P 500 falling -5.7% and the Nasdaq dropping -8.2%. The losses were even greater in local currency terms because the NZD strengthened materially against the USD.

Technology shares were in the firing line, not helped by reports that large companies were pressing pause on data centre expansion plans. This news triggered profit taking across some of the recent big winners in the AI space, including Nvidia, Broadcom and TSMC. Coupled with uncertainty over tariff policy, the spending outlook for the technology sector has certainly grown murkier in the near term.

In terms of Generate’s global holdings, our overweight to US equities has quickly turned from a tailwind to a headwind. While we have increased our exposure to the Asian region based on green shoots in the Chinese economy, our underweight to Europe negatively impacted our relative returns for the month.

The best performers for March were in the materials and healthcare sectors, with Alamos Gold (+17%), Cheniere Energy (+1.2%), and wholesale medicine distributors Cencora (+9.7%) and McKesson (+5.1%) bucking the negative trend. The worst performers were concentrated in the technology sector, with heavyweights such as Nvidia (-13.2%), Amazon (-10.4%) and Meta (-13.7%) weighing on returns.

While the tariff confusion looks set to continue for a while yet, there will come a point when the market has appropriately priced the risks. In the meantime, we are pouncing on opportunities to buy quality names at discounted prices with a view their quality will shine through over the long-term.

New Zealand & Australian equities

March was a tough month for global markets, and it was no different in Australasia. New Zealand‘s S&P/NZX50 and Australia’s S&P/ASX200 declined -2.6% and -3.2% respectively, caught in the wake of US headlines driven by President Trump’s tariff agenda.

Unsurprisingly then, global logistics company, Mainfreight (-11.6%), was the weakest performer in the Australasian portfolio. While the outcome from the US’ tariffs is uncertain, it is almost universally accepted that they are negative for global growth. With this as a backdrop, investors are feeling cautious over Mainfreight’s earnings outlook amidst a potential slowdown in global freight.

Other poor contributions came from Ryman Healthcare (-10.4%), predominantly driven by the company’s recent $1bn equity capital raise. Negative sentiment continues to persist towards the stock as the market digests the enormous dilution created, alongside a housing market that is unlikely to support meaningful sales growth in the near term. Ryman’s peers did not escape this sentiment, with Summerset and Oceania Healthcare also declining -7.8% and -9%, respectively.

The Australian REITs (or property) sector was a bright spot in the portfolio. While the market is not expecting a cut to the Australian official cash rate (OCR) in April, recent economic data suggested the Australian economy may be softening faster than expected. The softening Australian economy raises the chances of a cut to the Australia OCR over the next few months, giving interest-rate sensitive sectors some reprieve.

This was enough to support the REIT sector, and our holdings in Homeco Daily Needs (+0.9%) and Mirvac (+1.0%) benefited accordingly.

Returns to the 31st of March 2025 

(after fees* and before tax) 

Generate KiwiSaver Funds:

Generate Managed Funds:

** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.

***Following the launch of new funds in May 2022, our original Conservative Fund was renamed as the Moderate Fund and the Focused Growth Trust has been renamed as the Focused Growth Managed Fund.

^ these funds were established on 16 May 2022

^^ these funds were established on 3 July 2023

Past performance is not necessarily an indicator of future performance.

Generate’s fund updates can be found here for KiwiSaver Funds and here for Managed Funds.

Top Holdings as of the 31st of March 2025

Generate total Funds Under Management (FUM) as of 31st of March 2025: $6,685,841,128