International Shares Fund
Global equity markets have experienced a turbulent start to the year, marked by heightened volatility following President Trump's election victory last November. Initially, markets surged on optimistic expectations of deregulation, business growth stimulation, and tax cuts. However, these gains were reversed in the new year as aggressive tariff policies sparked concerns over escalating inflation and decelerating business growth.
The MSCI World Ex Australia Index peaked on February 18, only to decline amid rising tariff uncertainties. A brief recovery in mid-March saw Wall Street recoup some losses, but this was short-lived. Ultimately, the market remained under pressure due to uncertainties surrounding "Liberation Day" on April 2, with the benchmark ending the March quarter down 2.4%. The[NT1] [AS2] International Shares Fund (Wholesale) (the “Fund”) returned -2.54% over the quarter net of fees. The International Shares Fund (Retail) returned -2.64% net of fees over the quarter.
From a global perspective, many top-performing themes of the past two years have underperformed in 2025. AI-related themes, which dominated in 2023 and 2024, are experiencing a challenging start to the year. This has been driven by real competitors emerging, like DeepSeek, proving this is no longer a US-centric phenomenon. Additionally, there has been a lack of clarity in when and how the largest capex spenders will begin to see returns on their AI investments. Momentum and Size factors have underperformed, which reflects the severe level of over-crowding in these factors at the start of the year and the selloff in Megatech stocks. Instead, investors have been accelerating their positioning into Defensive / Low volatility factors.
At a country level, the year has started with a general rotation out of US equities, given historically high valuations, into European and Asian Equities, which have outperformed on a relative basis. At a sector level, our overweight exposure to the Information Technology sector detracted from performance, while our underweight exposure to Consumer Discretionary stocks positively contributed to performance. In the Information Technology sector, the tech giants experienced sharp share price corrections with NVIDIA’s share price falling nearly 20% and Microsoft down 11%. These falls reflected the emergence of competition from China-based DeepSeek and investors reassessing growth expectations amid economic uncertainties. The Consumer Discretionary sector faced challenges due to tariff uncertainties, as many companies in this space depend heavily on imported goods. Notably, Amazon (not held in the Fund) experienced a 14% decline in share price over the quarter.
It is now clear that the tariffs announced by President Trump at “Liberation Day” on April 2 were larger and deeper than the market was expecting. Market participants are finding President Trump very unpredictable, which is a major factor contributing to market volatility. Global markets have experienced a correction, which is not unexpected given the starting point of elevated valuations at the end of 2024. We have experienced falls of a similar magnitude at the beginning of the pandemic, the 2008 global financial crisis and the 1987 stock market crash. In each of these instances, markets recovered and grew to reach new highs. A sustainable recovery will depend on successful tariff negotiations and reductions, further declines in valuations to more attractive levels, central bank interest rate cuts and/or improvements in underlying fundamentals.
International Shares (Wholesale) Fund Performance
As at 31 March 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | -2.5% | -2.4% |
| 6 Months | 8.1% | 9.4% |
| 1 years p.a. | 12.3% | 12.3% |
| 3 years p.a. | 13.3% | 14.6% |
| 5 years p.a. | 14.5% | 15.8% |
| since inception p.a. | 11.2% | 12.2% |
^Benchmark is 75% S&P/ASX 300 Accumulation Index and 25% MSCI World ex Australia Index.
Inception date: 23/01/2012.
International Shares (Retail) Fund Performance
As at 31 March 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | -4.2% | -2.6% |
| 6 months | 3.4% | 1.6% |
| 1 year p.a. | 2.1% | 5.2% |
| 3 years p.a. | 13.0% | 13.1% |
| 5 years p.a. | 8.1% | 7.9% |
| 10 years p.a. | 9.5% | 7.3% |
| since inception p.a. | -4.2% | -2.6% |
^Benchmark is 75% S&P/ASX 300 Accumulation Index and 25% MSCI World ex Australia Index.
Inception date: 03/11/1997.
Contributors and detractors
Contributors and detractors
Top 3 contributors to Fund return
+70.4%
Fiserv, Inc (FI-)
+49.7%
Alphabet Inc. Class A (GOO)
+76.1%
American Express Company (AXP)
Top 3 detractors from Fund return
-9.1%
Canadian National Railway (CNI)
-13.0%
Elevance Health, Inc (ELV)
9.3%
Eli Lilly and Company (LLY)Contributors
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Intesa Sanpaolo S.p.A.(ISP) shares rose 27% in the March quarter driven by strong underlying fundamentals and growing investor confidence. The bank reported robust annual results, highlighting solid profitability and operational efficiency, which led to an upward revision of its earnings outlook for the current year. Investor sentiment was further lifted by the announcement of a new share buyback program, signalling management’s confidence in the bank’s financial strength.
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Allianz SE (ALV) shares rose 23.3% in the March quarter, supported by solid earnings and a constructive outlook. The company reported results that exceeded market expectations, highlighting its operational resilience and effective execution across core business segments. Investor confidence was further reinforced by continued commitment to shareholder returns, including a reliable dividend policy. These strengths helped sustain positive momentum in the stock throughout the quarter.
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O'Reilly Automotive, Inc. (ORLY) shares rose 20% in the March quarter due to a combination of strong financial performance and favorable industry trends. The company consistently posted robust earnings, driven by efficient operations and effective cost management. The broader automotive aftermarket industry also contributed to O'Reilly’s success, as rising vehicle prices and supply chain disruptions led consumers to keep their cars longer, increasing the demand for replacement parts and maintenance services. Additionally, O'Reilly's strategic expansion of its store network and its ability to capture a larger share of the growing auto repair market further bolstered its position.
Detractors
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Alphabet Inc. Class A (GOOGL) shares fell 18.8% in March quarter, primarily due to rising investor concerns that AI platforms like ChatGPT could threaten Google’s core search business. While Alphabet continues to invest in its own AI tools, uncertainty around its ability to maintain dominance weighed on sentiment. This was compounded by a broader market rotation away from tech stocks, as investors sought value in other sectors, further pressuring Alphabet’s share price during the quarter.
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ServiceNow, Inc. (NOW) shares fell 25.4% in March quarter due to a combination of cautious financial guidance, strategic uncertainty, and broader industry headwinds. The company issued a conservative outlook for its subscription revenue growth, which raised concerns about slowing momentum in its core business. Additionally, its high-profile acquisition of an AI startup sparked investor apprehension over the cost and potential integration challenges, contributing to a decline in share price. Broader pressures in the software sector, including concerns about reduced government spending and macroeconomic uncertainty, further weighed on sentiment, leading to the stock's relative weakness during the quarter.
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American Express Company (AXP) share fell 9.8% in March quarter, primarily due to investor concerns over potential impacts from newly imposed U.S. tariffs. These tariffs raised apprehensions about increased prices on goods and services, which could lead to reduced consumer spending—a critical component of American Express's revenue. Additionally, the company's cautious revenue guidance for the first quarter contributed to negative investor sentiment.
Waste Management, a US company providing waste collection, recycling and disposal services, was added to the portfolio after gaining Ethical approval.
Portfolio changes
Additions to the Fund
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Republic Services, Inc. (RSG) – Republic Services is a leading provider of non-hazardous solid waste collection, recycling and disposal services, delivering sustainable environmental solutions to residential, commercial and industrial customesr in the US. It was added to the portfolio after gaining Ethical approval during the year.
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Waste Management, Inc. (WM) – Waste Management, Inc. provides comprehensive waste and environmental services, including collection, recycling, and disposal solutions, to residential, commercial, industrial, and municipal customers across North America. It was added to the portfolio after gaining Ethical approval during the year.
- Danaher Corporation (DHR) – Danaher Corporation designs, manufactures, and markets professional, medical, research, and industrial products and services, with a focus on life sciences, diagnostics, and biotechnology. It was added to the portfolio after gaining Ethical approval during the year.
Reductions from the Fund
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Canadian National Railway Company (CNI) – Canadian National Railway is a leading North American transportation and logistics company, providing integrated rail and intermodal services that connect key markets across Canada and the US. The holding was reduced as part of the optimization process which aims to reduce tracking error.
- Aegon Ltd. (AGN) – Aegon Ltd. provides insurance, pensions, retirement, and asset management services globally, including life, health, and property insurance, as well as annuities and mutual funds. The holding was reduced as part of the optimization process which aims to reduce tracking error.
- United Utilities Group PLC (UU) – United Utilities Group plc provides water and wastewater services in the UK, managing approximately 122,000 kilometers of water and wastewater pipes. The company also engages in renewable energy generation, property management, and consulting services. The holding was reduced as part of the optimization process which aims to reduce tracking error.
US diagnostics and biotechnology medical devices company Danaher Corporation designs was added to the portfolio after gaining Ethical approval.
Global markets have experienced a correction, which is not unexpected given the starting point of elevated valuations at the end of 2024.
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)
*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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Investing ethically and sustainably means that the investment universe will generally be more limited than non-ethical, non-sustainable portfolios in similar asset classes. This means that the portfolio(s) may not have exposure to specific assets which over or underperform over the investment cycle, and so the returns and volatility of the portfolio(s) may be higher or lower than non-ethical, non-sustainable portfolios over all investment time frames.
The information contained in this document is believed to be accurate at the time of compilation.