Markets remain volatile, with geopolitics, inflation and interest rates all contributing to uncertainty. But beneath the surface, there are some important shifts - and opportunities - emerging.
So this month, Chief Investment Officer Mike Taylor, Head of Australasian Equities Michelle Lopez and Head of Global Equities Kent Williams join Wealth Adviser Sam de Court for a deeper dive on what’s driving markets - and what it means for investors.
Watch the video or read the full story below.
Sentiment is moving faster than fundamentals
A key theme right now is that market sentiment is moving faster than fundamentals.
While headline indices appear relatively stable, there has been significant movement underneath, with investors rapidly repositioning portfolios in response to changing expectations around inflation, interest rates and geopolitics.
This has led to sharp repricing - particularly in growth assets - even where underlying company performance has not materially changed.
Interest rates driving recent market moves
In Australasia, rising interest rate expectations have been a major driver of recent performance.
Bond yields have increased significantly, reflecting expectations of further rate hikes. This has placed pressure on growth stocks, particularly those with earnings further out in the future.
The result has been a meaningful pullback in small and mid-cap equities - the part of the market where our Australasian growth funds are focused.
Importantly, much of this repricing has already occurred, and reflects valuation adjustments rather than widespread deterioration in company fundamentals.
Market leadership is changing
Another important shift is that market leadership is changing.
We are seeing strength in areas such as commodities - particularly oil, where recent price movements have been driven by supply-side disruptions. At the same time, global opportunities are emerging beyond traditional large-cap technology names.
In particular, exposure to Asia-Pacific markets and AI-related hardware companies has been a key driver of returns in our global funds.
Strong global funds’ performance…
While parts of the Australasian market have been challenged, our two global growth funds have performed strongly. In returning over 22% (after fees, before tax) for the year to 31 March, the funds have outperformed their benchmarks, delivered strong relative returns versus peers and benefited from positioning across regions and sectors.1
Notably, around 80% of global active managers in New Zealand have underperformed over the past year, making this outperformance particularly meaningful.1
The breadth of returns across global markets reinforces the importance of active management - capturing winners across a wide opportunity set rather than relying on a narrow group of stocks.
… drives strong performance in KiwiSaver
In good news for Pie KiwiSaver Scheme members, our global funds’ strength has flowed through to our KiwiSaver funds, with our Balanced (+12.9%) and Growth (+16.2%) funds both ranked #1 in their categories by leading industry analysts Morningstar for the year to 31 March.2
Geopolitics: source of short-term noise
Geopolitics is playing a larger role in markets than in the past, contributing to ongoing volatility.
Recent events have impacted energy markets and reinforced a global push toward energy independence, placing upward pressure on commodity prices.
However, history shows that while geopolitical shocks can drive short-term market movements, their long-term impact is typically limited. Markets adjust, and fundamentals reassert themselves over time.
Volatility creates opportunity
Periods like this can feel uncomfortable - but they are also when opportunities emerge.
Market sell-offs are often broad and indiscriminate, meaning high-quality companies can be sold down alongside weaker ones.
In response, we have been:
- Reducing exposure to highly valued growth stocks
- Adding to high-quality businesses at more reasonable valuations
- Using hedging strategies (such as futures contracts) to manage downside risk
These conditions are creating opportunities that simply weren’t available 12 months ago.
Stay the course
We’ve been through market cycles like this before.
While short-term volatility can be unsettling, it is a normal part of investing - particularly when aiming for strong long-term returns.
At Pie Funds, our focus remains unchanged:
- Stay disciplined
- Focus on quality
- Take advantage of opportunities when they arise
We’ve been here before - and staying invested remains key to long-term success.
1. Pie Funds research
2. Morningstar
All returns quoted are after fees, before tax for the 1 year period to 31 March 2026. Information is current as at 28 April 2026. Pie Funds Management Limited (“Pie Funds”) is the issuer and manager of the funds in the Pie Funds Management Scheme and the Pie KiwiSaver Scheme (“Schemes”), the product disclosure statements of which can be found at www.piefunds.co.nz. Any advice is given by Pie Funds and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Schemes, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.