ETF Market Analysis

Track trends, performance, and insights for ETF investors in New Zealand

Current Market Overview

US Markets

Strong

S&P 500 continues to show resilience with tech sector leading gains. SPY and QQQ remain popular choices for NZ investors.

NZ Markets

Steady

NZ dividend ETFs offering consistent yields. Smartshares and Kernel funds provide stable local exposure.

Commodities

Mixed

Gold ETFs (GLD) providing hedge against uncertainty. Energy sector showing volatility.

Market Update: January 2025

Global markets have started 2025 with cautious optimism. Key trends affecting NZ ETF investors:

  • • Tech sector leadership: AI and cloud computing continue to drive QQQ performance
  • • Interest rate environment: Central banks maintaining higher rates, benefiting income ETFs
  • • NZD/USD volatility: Currency movements impact returns on US ETF holdings
  • • Dividend focus: Investors seeking income as bond yields normalize

Popular ETF Performance Trends

Growth ETFs

QQQ (Invesco QQQ Trust)

Nasdaq-100 Index

+15.2%

Continues to benefit from AI boom and tech sector dominance. Top holdings include Apple, Microsoft, and NVIDIA.

SPY (SPDR S&P 500)

S&P 500 Index

+12.3%

Broad market exposure delivering consistent returns. Remains the most popular ETF globally.

Kernel High Growth

Global Equity Fund

+10.5%

Low-cost NZ fund providing global diversification. Popular among Kiwi passive investors.

Income ETFs

JEPI (JPMorgan Equity Premium)

US Income ETF

7.2% yield

Combines equity exposure with options strategies for higher income. Monthly distributions attractive to income seekers.

Smartshares NZ Dividend

NZ Dividend Stocks

5.3% yield

Focuses on high-dividend NZ companies. Offers local market exposure with regular income.

VYM (Vanguard High Dividend)

US Dividend Yield

3.2% yield

Tracks US stocks with above-average dividend yields. Low fees and broad diversification.

Sector Trends to Watch

Technology

Strong Growth

AI, cloud computing, and cybersecurity driving sector performance.

ETF Options: QQQ, XLK, ARKK

Healthcare

Stable

Aging populations and medical innovation supporting long-term growth.

ETF Options: XLV, VHT, IHI

Financials

Positive

Higher interest rates benefiting banks and financial institutions.

ETF Options: XLF, VFH, KBE

Energy

Volatile

Oil prices and clean energy transition creating mixed signals.

ETF Options: XLE, ICLN, TAN

Real Estate

Challenged

Higher rates pressuring valuations, but select opportunities exist.

ETF Options: VNQ, IYR, XLRE

Consumer Discretionary

Mixed

Consumer spending patterns shifting amid economic uncertainty.

ETF Options: XLY, VCR, FDIS

Outlook for NZ ETF Investors

Short-Term (3-6 months)

Markets likely to remain volatile as central banks navigate inflation targets. Key considerations:

  • • Monitor NZD/USD exchange rates when investing in US ETFs
  • • Consider income ETFs as bond yields stabilize
  • • Tech sector may see continued volatility but long-term prospects remain strong

Strategy: Maintain diversification, avoid over-concentration in single sectors

Long-Term (1-5 years)

Fundamental trends supporting continued ETF adoption and market growth:

  • • Global equity markets historically deliver 7-10% annual returns
  • • Technology and healthcare sectors positioned for structural growth
  • • Low-cost index ETFs likely to continue outperforming active management
  • • PIE funds in NZ offering tax-efficient wealth building

Strategy: Focus on low-fee, diversified ETFs; reinvest dividends; stay invested long-term

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