Generate Fund Performance - January 2026

International Equities 

Global equities were mostly positive in January. Geopolitical developments featured prominently, including renewed tariff threats and discussion around Greenland; however, investors largely looked through the noise and remained focused on supportive economic conditions and a resilient corporate earnings backdrop. Central banks were steady, with the US Federal Reserve keeping interest rates on hold, as did the Bank of Japan.

In the United States, the S&P 500 rose 1.4% over the month, while the technology-heavy Nasdaq gained 1%. The Dow Jones outperformed, rising 1.7%, and small-cap stocks saw strong gains, with the Russell 2000 rallying 5.3%. European equities also performed well, with the Euro STOXX 50 lifting 2.7%. In Asia, markets were particularly strong, with the Hang Seng surging 6.9% and the Nikkei rising 5.9%.

Within Generate’s global portfolios, Micron Technology delivered another very strong month, surging around 45% as investors continued to digest the computer memory producer’s standout December earnings result. Management highlighted accelerating demand for memory used in AI data centres, improving pricing, and sharply higher profitability. The durability of the AI-led capital expenditure cycle would bode well for key suppliers across the semiconductor value chain. Lam Research, a leading global supplier of advanced wafer fabrication equipment and services, also reported results ahead of expectations, with its shares jumping 36% during the month.

Investor focus during the month remained firmly on how aggressively companies are investing to drive AI growth. Meta Platforms delivered a strong result, with revenues rising 24% year-on-year to US$59.9 billion and net income increasing to US$23 billion, up from US$14 billion a year earlier. The company expects AI-related capital expenditure to reach US$115–135 billion in 2026, nearly double last year’s level. Meta’s shares rose more than 8% over the month.

Outside of technology, Royal Caribbean Cruises had a very strong month, with shares rising 16%. The cruise operator reported a 36% increase in quarterly net income to US$754 million on revenues that rose 13% to US$4.26 billion, supported by robust booking trends, firm pricing, and healthy onboard spending. Revenue has increased in every quarter since the pandemic, and growth for the current year is expected to be in the low double-digit range. Around two-thirds of the company’s 2026 cruise capacity is already booked at record rates, and management plans to expand the fleet with up to six additional vessels over the coming years, reflecting confidence in long-term demand.

On the downside, Netflix shares fell 11% despite delivering a solid quarterly result. Revenue rose 18% to US$12.1 billion and net income increased 29%, though margins are expected to face near-term pressure as the company increases content spending and pursues the acquisition of Warner Bros. While costs are rising, paid memberships increased 8% over the past year to 325 million, and longer-term earnings drivers remain intact, supported by strong momentum in the ad-supported tier and planned price increases to sustain double-digit revenue growth.

Microsoft shares were weaker during the month, falling 11%, despite the company delivering earnings and revenue ahead of expectations. Investor sentiment was tempered by a modest slowdown in Azure cloud growth to 39%, as well as some near-term margin pressure from elevated AI investment. Capital expenditure reached US$37.5 billion for the quarter, above forecasts, reflecting Microsoft’s aggressive build-out of AI infrastructure. However, the company reiterated strong demand for AI services, growing uptake of Copilot across both enterprise and consumer products, and pointed to a robust pipeline of cloud and AI contracts. While margins are being pressured in the near term, the scale of Microsoft’s platform, deep integration of AI across its product suite, and long-term revenue opportunities continue to underpin the investment case.

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New Zealand & Australian equities

The New Zealand and Australian equity markets delivered mixed performances during the month. The NZX50 declined 0.9%, despite further evidence of improving economic momentum. Data released during the period showed the manufacturing sector in New Zealand expanding at its fastest pace in four years, while the services sector grew for the first time in nearly two years. Business confidence also rose to its highest level in more than a decade. Inflation edged higher to 3.1% in the December quarter; however, cost-of-living pressures are easing for many households, particularly as interest costs decline. Due to somewhat sticky inflation and improving economic growth markets are currently pricing in the possibility of interest rate hikes by the Reserve Bank of New Zealand, though not until later in the year.

In Australia, the ASX 100 rose 1.6% during the month, supported by strength in the energy and materials sectors as commodity prices trended higher. The technology sector, however, came under pressure amid expectations of rising domestic interest rates following a stronger-than-expected quarterly inflation print. Consumer price inflation rose to 3.8%, the highest level in six quarters, setting the scene for a rate hike by the Reserve Bank of Australia, which was duly delivered in the first week of February.

Within Australian equities, Woolworths shares rose 5.3% during the month, largely driven by improving investor expectations rather than any company-specific news. Investors are increasingly looking through last year’s operational challenges, including labour and union-related disruptions, which create an easier comparative backdrop for the upcoming result. While cost-of-living pressures continue to weigh on consumer spending, headline performance is expected to improve on the prior year, supported by stabilising margins and more normalised operations. The share price rally reflects growing confidence that earnings have troughed.

Sigma Healthcare shares rose 5.1% during the month, despite no company-specific news. The move followed December quarter retail spending data showing strong growth in the pharmacy category, reinforcing confidence in sector demand. Pharmacies continue to benefit from resilient consumer spending on essential health products, even as discretionary spending remains under pressure. The share price strength reflects improving sentiment toward the sector and expectations that underlying earnings momentum remains supportive.

On the downside, Pro Medicus fell 16.6% during the month. The shares are a recent but minor position in the portfolio. Pro Medicus develops and supplies a proprietary, cloud-based clinical imaging software platform, primarily used by radiologists. The company has a strong track record of winning contracts with US healthcare institutions and has never lost a client once installed. The share price weakness reflected a broader sell-off across software stocks, driven by concerns around AI-related disruption. We believe this sell-off has been overdone and does not reflect the company’s underlying fundamentals or competitive position.

In New Zealand, Port of Tauranga was a solid performer over the month, rising around 4%. Shares in the country’s largest port have benefited from positive investor sentiment around trade and cargo volumes, amid signs of a broader economic recovery. Investors have also been watching progress on the company’s Stella Passage expansion and fast-track consenting efforts, which could help ease capacity constraints and underpin future growth, keeping sentiment constructive.

A2 Milk was a weaker performer, falling 8.4% over the month. Data released during January showed that China’s birth rate had fallen to its lowest level since 1949, a key concern given that China is by far A2 Milk’s largest market. Despite this challenging demographic backdrop, there are some positives. A2 Milk has continued to perform relatively well in a tough market, gaining market share and reinforcing its positioning as a premium offering. Looking ahead, there is some prospect of improvement, with marriages in China rising sharply in 2025, which could support a recovery in birth rates in 2026. Sentiment toward A2 Milk was also impacted by infant formula product recalls from competitors Danone and Nestlé; however, these recalls have not extended to A2 Milk and are not expected to.

Portfolio additions during the month included ResMed, which develops and manufactures medical equipment for the treatment of obstructive sleep apnoea. We established a position ahead of the company’s quarterly result at the end of January, which proved to be a positive one, exceeding market expectations on both sales and gross margins. ResMed continues to take market share and is benefiting from a strong product cycle, reinforcing confidence in the company’s medium-term growth outlook.

Carsales was also added to the portfolio during the month. The company is the leading automotive classifieds platform in Australia and also has attractive international operations across Korea, the United States (non-auto), and Latin America. We believe the recent share price sell-off, driven by concerns around potential AI-related disruption, has been overdone. At current levels, we see Carsales offers appealing cyclical exposure at a valuation that is attractive, supported by strong market positions and diversified earnings streams.

Returns to the 31st of January 2026 

(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.

^^^ these funds were established on 30 April 2025.

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 January 2026

Generate total Funds Under Management (FUM) as of 31st of January 2026: $8,649,127,035