After a pretty difficult March, it’s natural to feel concerned when you see negative quarterly returns appear in your investment account. These periods can feel uncomfortable, but they are a normal part of investing. What matters most is how markets behave over time, not over a single month or quarter. However, April provided a useful reminder that markets can recover just as quickly as they fall.

What went well in April?

• Markets showed more resilience after March – Renewed optimism around a resolution to the Iran conflict, and broadly positive corporate earnings, drove some markets to new highs.
• NZ shares stabilised – The NZX50 finished flat for April giving some relief to investors.
• NZ fixed income provided modest returns – After a weaker March, fixed income returns settled in April.
• New Zealand outlook remained steady – Export demand, particularly in dairy, stayed firm.
• Investor confidence improved – Markets reacted less sharply to daily news.

What captured our attention?

• Recovery was uneven – Not all markets bounced back at the same pace.
• Interest rates still a focus – Central banks continued to signal caution.
• Economic growth concerns remain – Europe and China continue to show slower momentum.
• Geopolitical risks persist – Ongoing tensions still create uncertainty.
• Currency movements added impact – A stronger New Zealand dollar affected export returns.
• Volatility has not disappeared – Short-term swings are still likely.

Market commentary.

April provided some relief after a difficult March. Share markets recovered part of the earlier declines as energy prices stabilised and company earnings came in stronger than expected. While not all markets rebounded equally, the overall tone was more stable, and daily market movements were less extreme.

In New Zealand, domestic shares remained influenced by interest rate expectations and cautious consumer spending. Export sectors, particularly dairy and agriculture, continued to support the economy. Central banks, including the Federal Reserve (in the U.S.A.) and the Reserve Bank of New Zealand, maintained a cautious stance, reinforcing expectations that interest rates may stay elevated for longer.

Investing in the transition to a lower-carbon world.

There are different views on how investment portfolios should respond to climate change. Some investors prefer to avoid fossil fuels completely, while others focus on supporting companies that are helping the world move toward lower emissions over time.

Our approach sits in the second category. It is based on the view that the transition to a lower-carbon world is a long and complex process. It requires investment, innovation, and a practical understanding of how the global economy works today.

In line with our Ethical Investment Policy, we exclude companies whose main business is the extraction of coal and/or tar sands. We do not exclude companies simply because they have some exposure to fossil fuels, because we believe that achieving the transition is not as simple as removing entire sectors.

We also recognise that fossil fuel divestment is important to many investors. However, removing all exposure does not reflect how real change happens. Fossil fuels are still part of the global energy system. They support transport, manufacturing, construction, and even the building of renewable energy infrastructure itself. The transition is underway, but it happens alongside the existing system, not in place of it overnight.

A good example of this approach is our holding in Robeco Smart Energy Fund. The fund does not focus only on traditional renewable energy companies. Instead, it invests in a wider group of businesses that are helping the shift to lower emissions.

These include companies involved in:

• Upgrading electricity grids so they can handle more renewable energy
• Improving energy efficiency in buildings, transport, and industry
• Developing renewable energy systems such as wind, solar, and battery storage
• Helping heavy industry reduce emissions and change how it operates over time

Many of these companies still operate within systems that use fossil fuels. However, their importance comes from the direction they are moving in, not where they started.

This approach aligns with our Ethical Investment Policy. We avoid the most carbon-intensive activities, such as coal and tar sands extraction, while still investing in companies that are part of the transition.

It also reflects an important investment reality: diversification matters. Excluding parts of the energy sector can reduce investment opportunities and increase portfolio concentration. Over time, this can limit diversification and raise risk, while also reducing exposure to companies driving change.

There is also a broader consideration. An all-or-nothing approach to fossil fuels can have unintended consequences, including higher energy costs or reduced investment in supply at a time when demand remains high. These effects can flow through to consumers and households, particularly those least able to absorb higher costs. A more gradual approach helps support a fairer and more stable transition.

Ultimately, our aim is to support meaningful progress toward lower emissions, while maintaining diversified portfolios and recognising the complexity of how global change happens.n make a significant difference over time. The hardest part is staying calm when markets feel uncertain. Thoughtful decisions help keep your long-term goals on track, even when short-term swings are uncomfortable.

The above information is for information purposes only and is not financial advice. Past returns are not a guarantee of future returns. We recommend you seek advice from a licensed financial advice provider when making decisions about your investments.

The New Zealand Anglican Church Pension Board trading as Anglican Financial Care are the manager and issuer of Christian KiwiSaver Scheme, The Retire Fund and The New Zealand Anglican Church Pension Fund. Product Disclosure Statements and Fund Updates are available on the Documents page of the AFC website Forms and Documents.