International Shares Fund
Global equity markets delivered another strong quarter, with the MSCI World Ex Australia Index rising 6.1%, outperforming the ASX300 (+5.0%). US equities led gains, supported by resilient earnings, robust consumer demand, and accelerating AI adoption. Despite persistent geopolitical and economic headwinds, investor sentiment remained constructive, buoyed by expectations of rate cuts and deregulation.
The defining feature of the quarter was the remarkable calm in markets. Volatility remained low even as uncertainty around inflation, economic growth, and geopolitical tensions—including potential government shutdowns—grew. Equity performance appeared driven by a singular expectation: that the Federal Reserve would begin easing rates, regardless of whether inflation had been fully subdued. This narrative supported strength across global developed markets.
Momentum factors continued to dominate market leadership. AI-related stocks, now comprising over 40% of the S&P 500’s market cap, were key contributors to both performance and risk. However, elevated valuations and crowding in high-beta names prompted caution. Under the surface, sector and factor rotations, along with low asset correlations, created pockets of volatility.
The International Shares Fund (Wholesale) (the “Fund”) returned 5.1% over the quarter net of fees. The International Shares Fund (Retail) returned 5.0% net of fees over the quarter. At a sector level, stock selection in Information Technology and Financials negatively impacted relative performance, while our underweight exposure to Consumer Staples and our overweight exposure to Communication Services assisted performance. The performance of the “Magnificent 7” was mixed with Alphabet, Apple, NVIDIA and Tesla (not held) outperforming the benchmark, while Meta, Microsoft and Amazon (not held) posted below-benchmark returns. Alphabet’s share price rose 14% in September alone, and over 35% for the quarter overall, marking its best quarterly performance since 2005. The company’s share price surged due to strong earnings growth, momentum in AI products like Gemini, a favorable antitrust ruling, and increased investor returns through dividends and buybacks.
Outlook for the Fund
In the near term, markets are likely to remain focused on the Fed’s policy path, as navigating the broader geopolitical and economic landscape remains complex. While low volatility continues and markets are at all time highs, elevated valuations are driving a cautious short-term outlook. The non-consensus view would be a continued rally in the first quarter of 2026. The medium-term outlook continues to be supported by the expectation for lower rates, low household leverage, re-accelerating earnings growth and tech-driven capex.
International Shares (Wholesale) Fund Performance
As at 30 September 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | 5.1% | 6.1% |
| 6 Months | 10.9% | 12.4% |
| 1 year | 19.9% | 23.0% |
| 3 years p.a. | 21.7% | 22.6% |
| 5 years p.a. | 15.2% | 16.3% |
| since inception p.a. | 11.7% | 12.8% |
^Benchmark is the MSCI World ex Australia Index.
*Past performance is not a reliable indicator of future returns.
Inception date: 30/06/2015.
International Shares (Retail) Fund Performance
As at 30 September 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | 5.0% | 6.1% |
| 6 months | 10.7% | 12.4% |
| 1 year | 19.5% | 23.0% |
| 3 years p.a. | 21.2% | 22.6% |
| 5 years p.a. | 14.7% | 16.3% |
| since inception p.a. | 6.0% | 9.2% |
^Benchmark is MSCI World ex Australia Index.
*Past performance is not a reliable indicator of future returns.
Inception date: 13/06/2007.
Contributors and detractors
Contributors and detractors
Top 3 contributors to Fund return
+36.5%
Alphabet Inc. Class A (GOOGL-US)
+22.8%
Apple Inc. (AAPL-US)
+16.8%
NVIDIA Corporation (NVDA-US)
Top 3 detractors from Fund return
-35.7%
Gartner, Inc. (IT-US)
-26.1%
Fiserv, Inc. (FI-US)
-11.5%
Netflix, Inc. (NFLX-US)Contributors
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Alphabet Inc. (GOOGL) returned 36.5% over the quarter as the company posted a strong September quarter result, with revenue and profit beating market expectations on the back of robust search advertising demand and accelerating growth in its cloud segment. The company also made notable progress in integrating generative AI across Search, YouTube and Workspace, reinforcing engagement and creating new monetisation opportunities. Importantly, earlier market concerns that AI could disrupt Google’s core search business eased during the quarter as results demonstrated the company’s ability to incorporate AI into its platform rather than be displaced by it. Continued investment in AI infrastructure and model development underscored Alphabet’s leadership ambitions, and the solid earnings print helped lift sentiment toward the stock.
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Apple Inc. (AAPL) delivered a solid September quarter, with the stock rising 22.8% as investor sentiment was lifted by better-than-expected earnings and stable demand across core products. The launch of the latest iPhone drove upgrade activity, and Services continued to provide steady recurring revenue. However, growth in some segments, such as Mac and iPad, remained modest. Investors also remain cautious about the pace and monetisation of Apple’s AI initiatives relative to competitors, which adds some uncertainty to the longer-term outlook. Overall, the quarter showed resilience in Apple’s core business, but sentiment reflects measured optimism rather than a full recovery from weaker year-to-date returns.
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NVIDIA Corporation (NVDA) returned 16.8% over the quarter, driven by robust demand for its AI-focused GPUs and continued growth in its data center business. Revenue from AI workloads and generative AI applications exceeded expectations, reinforcing NVIDIA’s leadership position in the high-performance computing market. Gaming revenues showed steady improvement, while the company continued to invest in next-generation AI infrastructure and software tools, positioning itself for further expansion. Investor sentiment was buoyed by the combination of strong earnings, clear AI growth catalysts, and NVIDIA’s ability to capitalise on accelerating adoption of AI technologies, resulting in a solid performance over the quarter.
Detractors
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Gartner Inc. (IT) shares fell 35.7% over the September quarter despite reporting earnings that beat expectations. Investor concerns centered on slowing growth in contract values and broader macroeconomic pressures, which overshadowed the positive earnings performance. Additionally, uncertainties around technology spending and competitive dynamics in the advisory and research market contributed to cautious sentiment. Overall, while the company demonstrated operational resilience, these headwinds weighed on the stock, leading to underperformance during the quarter.
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Fiserv Inc. (FI) shares fell 26.1% over the quarter despite reporting earnings that exceeded expectations. Growth in the merchant solutions segment came in below market projections, and the company revised its full-year growth outlook downward, reflecting softer momentum than previously anticipated. Additionally, expansion in its point-of-sale platform remained flat, as earlier client migrations had already been completed. These factors raised investor concerns about near-term growth prospects, contributing to the stock’s underperformance during the quarter.
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Netflix (NFLX) shares fell 11.5% over the September quarter, a downturn ignited by its July earnings report. The company's guidance for future subscriber growth fell short of Wall Street expectations, sparking fears that the boost from its password-sharing crackdown was fading faster than anticipated.This core concern, combined with persistent competitive pressures and broader anxiety over consumer spending, defined the negative investor sentiment that pushed the shares lower throughout the quarter.
Exelon Corporation, a utility holding company with a focus on electricity and natural gas, was added as part of the Fund’s optimisation process which aims to reduce tracking error.
Portfolio changes
Additions to the Fund
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Exelon Corporation (EXC-US) is a utility holding company operating through subsidiaries. Its businesses focus on electricity and natural gas transmission, distribution, and retail sales, while Exelon Business Services provides shared support services such as legal, HR, finance, IT, and supply management to its subsidiaries. The holding was initiated as part of the optimisation process which aims to reduce tracking error.
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Central Japan Railway Company (9022-JP) is a Japan-based company offering railway services, retail operations, and real estate management through its transportation, distribution, and real estate segments. The holding was initiated as part of the optimization process which aims to reduce tracking error.
- Eversource Energy (ES-US) is a utility holding company supplying electricity, natural gas, and water through its subsidiaries, operating across multiple states in New England. The holding was initiated as part of the optimization process which aims to reduce tracking error.
Reductions from the Fund
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ANSYS, Inc. (ANSS-US) was acquired by Synopsys at a 29% premium, with the transaction closing on July 17, 2025.
- Juniper Networks, Inc. (JNPR-US) was acquired by Hewlett Packard Enterprise at a 26% premium, with the transaction closing on July 2 2025.
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HKT Trust & HKT Ltd. engages in the provision of telecommunications and related services. It operates through the following business segments: Telecommunications Services, Mobile, and Other Businesses. The holding was divested as part of the optimization process which aims to reduce tracking error.
AI-related stocks, now comprising over 40% of the S&P 500’s market cap, were key contributors to both performance and risk
Sector allocation
Sector overweights
Cash, Communication Services, Financials, Industrials, Information Technology, Real Estate
Sector underweights
Consumer Discretionary, Consumer Staples, Energy, Health Care, Materials, Utilities (renewables)
While low volatility continues and markets are at all time highs, elevated valuations are driving a cautious short-term outlook
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*Total returns are calculated using the sell (exit) price, net of management fees and gross of tax as if distributions of income have been reinvested at the actual distribution reinvestment price. The actual returns received by an investor will depend on the timing, buy and exit prices of individual transactions. Return of capital and the performance of your investment in the fund are not guaranteed. Past performance is not a reliable indicator of future performance. Figures showing a period of less than one year have not been adjusted to show an annual total return. Figures for periods of greater than one year are on a per annum compound basis. The current benchmark may not have been the benchmark over all periods shown in the above chart and tables. The calculation of the benchmark performance links the performance of previous benchmarks and the current benchmark over the relevant time periods.
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