International Equities
A theme that dominated earnings season in July was a notable shift in investor focus towards the commercial returns being generated from artificial intelligence investment. Companies able to demonstrate that AI investment was translating into stronger earnings, higher growth and increasing customer demand were rewarded. Those spending heavily without clear evidence of returns were treated far more cautiously.
The clearest winners were Microsoft and Amazon, which were both strong contributors to performance after surging following their earnings releases.
Microsoft soared 25% during the month after delivering one of the strongest earnings reports of the season. Quarterly revenue jumped 18% to US$90 billion, while Azure cloud revenue exceeded US$100 billion annually for the first time. Azure growth accelerated to 43%, and Microsoft 365 Copilot surpassed 30 million paid seats, highlighting accelerating adoption of the company's AI offerings. The market's reaction was extraordinary. In a single trading session, Microsoft added almost US$500 billion in market value, the largest one-day increase ever recorded by a listed company.
Amazon reinforced the same message. Amazon Web Services (AWS) grew revenue 37% year-on-year to more than US$42 billion, its fastest growth rate since 2021 and well ahead of expectations. Management increased its capital expenditure forecast to US$220 billion for the year, yet investors responded positively because they could clearly see the payoff from that investment. AWS remains Amazon's most important profit engine, and management indicated cloud demand continues to exceed available capacity, with current investment levels potentially insufficient to meet expected demand in 2027. Amazon shares recorded their strongest one-day gain since 2012 following the result and ended the month 14% higher.
Mastercard was also among the strongest contributors, rallying around 12% following a robust quarterly result. Quarterly revenue jumped 14% to US$9.3 billion while net income increased 19% to US$4.39 billion, comfortably exceeding expectations. Transaction volumes remained resilient despite ongoing geopolitical and economic uncertainty, with gross dollar volume increasing 8% to US$2.9 trillion and cross-border transaction volumes rising 12%. The result reinforced the strength of consumer spending, particularly among higher-income households, while continued growth in Mastercard's higher-margin cybersecurity, fraud prevention and data analytics businesses supported strong profitability.
On the downside, semiconductor supplier SK Hynix fell 35% during the month despite reporting another exceptional result. Operating profit increased more than five-fold and the company announced plans to invest at least US$31 billion this year to expand production of advanced AI memory chips. The shares were caught up in a broader sell-off across Korean technology stocks, exacerbated by margin calls and concerns around AI-related investment. Despite the decline, the shares remain up around 150% year to date and have risen more than six-fold over the past year. At approximately four times earnings, we continue to view the valuation as compelling, particularly given the company's dominant position in AI memory chips and strong long-term demand outlook.
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New Zealand & Australian equities
Mainfreight was among the strongest contributors to performance, rising 13% during the month. The logistics company provided a highly encouraging trading update at its annual shareholder meeting, reporting that trading conditions had continued to improve since its May result. Management noted stronger-than-expected revenue and profit momentum across much of the network, suggesting the recovery experienced during the second half of FY26 had accelerated into the new financial year. The update was particularly encouraging given market expectations had already improved in recent months. New Zealand operations reported a strong start to the year across both transport and warehousing, while management also highlighted disciplined cost control and a lower capital expenditure outlook.
Dexus gained 11% during the month, supported by continued progress on its asset divestment programme and improving sentiment towards the property sector. The company announced the sale of three office assets at prices close to book value, taking total divestments beyond its $2 billion target for FY25-FY27. Achieving sales at book value was particularly encouraging given Dexus' share price continues to imply a discount of around 30% to the value of its underlying assets. Proceeds are being directed towards debt reduction and strengthening the balance sheet. The sector also benefited from growing expectations that interest rates may move lower over the coming year.
On the downside, Pro Medicus declined 20% during July despite the absence of any material company-specific news. The weakness largely reflected broader investor concerns around elevated valuations across high-quality growth companies, with several Australian technology favourites also experiencing sharp declines during the month. While a broker downgrade may have added to the selling pressure, the move appeared to be driven primarily by valuation concerns rather than any deterioration in the company's underlying business which remains strong from our perspective.
Returns to the 31st July 2026
(after fees* and before tax)
Generate KiwiSaver Funds:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception**
(p.a.)
Focused
Growth Fund
-1.86%
12.56%
8.35%
10.37%
10.16%
Growth
Fund
-1.58%
10.25%
7.20%
8.99%
9.15%
Balanced Fund^
-1.58%
8.54%
9.07%
Moderate Fund
-1.47%
10.06%
5.01%
5.41%
5.81%
Conservative Fund^
-1.30%
4.40%
5.64%
CashPlus Fund^
0.20%
2.89%
4.23%
Thematic Fund^^^
-3.59%
18.32%
27.22%
Global Fund^^^
-3.37%
15.62%
26.45%
Australasian Fund^^^
0.39%
3.37%
9.36%
Generate Managed Funds:
1 Month
1 Year
5 Year (p.a.)
10 Year (p.a.)
Since inception** (p.a)
Focused Growth Managed Fund
-1.86%
12.49%
8.29%
9.36%
Balanced Managed Fund^
-1.57%
8.55%
9.10%
Conservative Managed Fund^
-1.32%
4.41%
5.62%
Thematic Managed Fund^^
-3.57%
18.27%
21.32%
Australasian Managed Fund^^
0.39%
3.37%
4.93%
Global Managed Fund^^^
-3.38%
15.79%
26.63%
CashPlus Managed Fund^^^
0.21%
2.97%
3.13%
Fixed Interest Managed Fund^^^
-1.01%
2.76%
3.05%
* Except for the $3 per member per month administration expense that is charged to KiwiSaver members over 18.
** The Generate KiwiSaver Scheme funds opened on 16 April 2013. The Generate Focused Growth Trust opened on 1 November 2019.
^ 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.
Top Holdings as of the 31st July 2026
International Equities
Microsoft
Amazon
Nvidia
Alphabet
Broadcom
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