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Performance update – September

Markets in September faced some challenges

September continued to be challenging for global share markets albeit with a slight recovery, as a range of political uncertainties held down confidence. Difficulties in trade discussions between US and China seem to have improved with the next round of trade talks scheduled to take place mid-October.

There are still several areas of geopolitical uncertainty. Tensions between Iran and Saudi Arabia are high in the Persian Gulf with attacks on Saudi oil production facilities in September. In the UK, there is still uncertainty with BREXIT. This along with intensifying protests in Hong Kong and the possible impeachment of President Trump all add to investor nervousness. On a positive note, the world’s central banks responded to a weaker growth outlook and mounting risks with interest rate cuts, notably from the US Federal Reserve and the European Central Bank.

New Zealand and Australian share markets were relatively healthy compared to global shares with a gain of 1.8% in New Zealand, while the Australian share market gained 1.3%. A decline in the NZ dollar versus the Australian currency continued to enhance returns from Australia from NZ investors’ point of view.

High demand for government bonds have helped to keep interest rates low this month. Lower interest rates continued to assist listed real assets such as Property and Infrastructure with the Global Listed Infrastructure index rising by  1.2% in September, while Global Listed Property gained 2.6%.

Despite the challenges, positive returns from both Global and New Zealand Property and Infrastructure helped to even out the weakness in the share markets showing the benefits of having well-diversified investment portfolios in KiwiSaver.

It’s important to remember that KiwiSaver and the New Zealand Retirement Trust are long-term savings plans and funds will go up and down. If you would like more information or to discuss whether you’re in the right fund to suit your savings needs, please talk to your Adviser or call us on 0800 267 5494. Past performance is not indicative of future returns.

How do the latest returns compare to the average term deposit?

Compared to the average return on the average term deposit for 1 year of 3.35% and 5 years of 5.50% (offered by the major banks in New Zealand on 28 September 2018 and 26 September 2014 respectively), the returns for some of our key funds were:

 

Fund type

Annual return (1 year) *

Average annual return (5 years)**

AMP Growth Fund

6.65%

7.74%

AMP Balanced Fund

6.76%

6.73%

AMP Moderate Fund

6.60%

5.54%

*30 September 2018 – 30 September 2019
**30 September 2014 - 30 September 2019

These returns are after total fund charges and before tax and are calculated based on unit price movements adjusted by total fund charges and tax credits and including a full allowance of any foreign tax credits.

You can view returns for all the AMP KiwiSaver Scheme funds here.
You can view returns for all the NZ Retirement Trust Returns here.

If you have any questions you can talk with your Adviser or call us on 0800 267 5494. Past performance is not indicative of future returns.

Detailed commentary

September markets delivered a stabilization and some value gains for global equities, following August’s weak patch. However, a range of geopolitical uncertainties continue to supress investor confidence. Trade tensions persisted but as September advanced, some form of compromise between the USA and China again seemed possible. President Trump deferred the imposition of a new round of tariffs until after China’s celebration of the 70th Anniversary of the founding of the Peoples’ Republic on 1st October and indicated the next round of trade talks will take place mid-month. Risks to the global outlook are still skewed to the downside, as even if a resolution or cease-fire in the trade war comes into view, other parts of the world are still contributing to global geopolitical uncertainty. Tensions between Iran and Saudi Arabia are high in the Persian Gulf with attacks on Saudi oil production facilities in September following on from attacks on oil tankers in August.  In the United Kingdom, BREXIT uncertainty compounded as on the one hand, Parliament bound PM Boris Johnson’s hands with legislation restricting an EU exit with no negotiated deal in place. On the other hand, the UK Government appears resolved to push ahead and take the UK out of the Union on 31 October with a last-chance deal being proposed early in the month. In Asia, the intensifying protests in Hong Kong and China’s potential response to them added to investor nervousness. Finally, the US Democrat-controlled House began instituting investigations into the President as the early steps towards a possible impeachment. On the positive side, the world’s central banks responded to a softer growth outlook and mounting risks with interest rate cuts, notably from the US Federal Reserve and the European Central Bank.

Supported by lower rates, in the face of uncertainty the global equity benchmark recovered 2.3% in September. Emerging Markets gained traction with a 2.5% rise. Within Australasia, the New Zealand equity market was relatively robust with gain of 1.8% for the month, while the Australian equity market gained 1.3%. A further decline in the NZ dollar versus the Australian currency continued to enhance returns from Australia from the NZ investors’ point of view. Both markets remain ahead strongly for the full year. The NZ market has risen 18% in the last twelve months while the Australian index is up by 8.4%. Within NZ shares, the listed Real Estate sector has performed extremely strongly in 2019, as lower domestic interest rate have driven a 36% gain for the sector so far this year. Globally, Value stocks outperformed Growth stocks in September by more than 3% as a major sector rotation got underway.

Investors seeking safe havens have helped keep rates low on global government bond markets. The U.S. 10-Year Treasury Note yields rose modestly to 1.66%, while the NZ 10-Year Bond yield moved slightly upwards to 1.09% as September ended. Lower interest rates continued to assist listed real assets such as Property and Infrastructure. The Global Listed Infrastructure index thus rose 1.2% in September, while Global Listed Property gained 2.6%. Lower domestic interest rates combined with deteriorating domestic business confidence and flagging growth momentum helped push the NZ dollar down marginally, by 0.6% versus the US dollar and by 0.8% on the Trade-Weighted Index.

Volatile conditions are continuing in markets but returns from interest rate-sensitive asset classes help to offset periods of weakness in equity markets, showing the benefits of well-diversified investment portfolios in KiwiSaver.

A disclosure statement is available on request and free of charge from your Adviser.

*Please note past returns are not indicative of future returns. For more information, download a copy of the AMP KiwiSaver Scheme Product Disclosure Statement and Fund Update Booklet, which have been lodged on the Scheme's offers register entry at companiesoffice.govt.New Zealand/disclose. AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme (the 'Scheme'). The Supervisor of the Scheme is The New Zealand Guardian Trust Company Limited.

Important information

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AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme (the 'Scheme'). The Supervisor of the Scheme is The New Zealand Guardian Trust Company Limited.

Please note past returns are not indicative of future returns.

For more information, download a copy of the AMP KiwiSaver Scheme Product Disclosure Statement and Fund Update Booklet, which have been lodged on the Scheme's offers register entry at companiesoffice.govt.nz/disclose.

The information included in this article is of a general nature and is not a substitute for financial or other professional advice. To the extent that the information constitutes advice, it is class advice only. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. For personal financial advice, we recommend you contact your Adviser or if you don't have an Adviser, contact us on 0800 267 263 and we can put you in touch with one. 

A disclosure statement is available from your Adviser, on request and free of charge.