Fund watch

What happened in Q1?

Here are some key themes from the first quarter of 2023:

Bank failures spook markets: In March, the failure of Silicon Valley Bank (SVB) rattled financial markets, as the California-based lender collapsed at an alarming speed after a failed capital raise to cover a shortfall in deposits saw a further run on the bank. Following SVB’s collapse, New York-based Signature Bank suffered a similar fate as its niche client portfolio saw a run on its deposits too.

To shore up confidence, US regulators pledged to make all deposits whole (under current FDIC legislation, only deposits up to $250,000 are insured).

Credit Suisse concerns end in UBS takeover: A few days after the collapse of the two US banks, Credit Suisse ran into troubles when its annual report showed it was experiencing an outflow of funds. This prompted the bank’s largest lender to say it would not provide any further funding, raising fears that could have difficulty raising equity to strengthen its balance sheet.

As concerns mounted, it was agreed, with support from the Swiss government, that UBS would buy Credit Suisse for about US$3 billion.

Fed raises interest rates by 25 basis points: In March, the US Federal Reserve (the Fed) raised the fed funds rate by 25 basis points, and signalled that the end of the current tightening cycle is near, with participants expecting one more interest rate hike in 2023.

In its summary of economic projections, the Committee reduced its growth outlook (it does not foresee a recession), revised down its unemployment rate forecast and said inflation will stay above normal levels throughout 2023.

This article has been prepared by ANZ New Zealand Investments Limited (‘ANZ Investments’) for information purposes only and it should not be treated as financial advice.

Superannuation Investments Limited is the issuer and manager of the SIL Mutual Scheme. ANZ Investments is not an authorised deposit taking institution (ADI) under Australian law and investments in the scheme aren't deposits in or liabilities of ANZ Bank New Zealand Limited, Australia and New Zealand Banking Group Limited, or their subsidiaries (together 'ANZ Group'). ANZ Group doesn’t stand behind or guarantee ANZ Investments. Investments in the scheme are subject to investment risk, including possible delays in repayment, and loss of income and principal invested. ANZ Group won’t be liable to you for the capital value or performance of your investment.

Past performance does not indicate future performance, and performance can be negative as well as positive. This material is for information purposes only. We recommend seeking financial advice about your situation and goals before getting a financial product.

Investment and administration manager: ANZ New Zealand Investments Limited.