April Investment Update

Market Commentary

April was a good month generally across asset classes, particularly equities. The equity markets continued their rally and have now broadly
recovered from the tumult in March. Falling energy prices helped bring headline inflation down in major developed economies. While near-term
recessionary risk seems to have receded somewhat, the closure of another US financial institution at the end of April highlights that the cumulative
impact of central bank tightening has still not been fully felt by developed economies.

Movements in interest rates continue as the main driver of returns this year with large fluctuations due to considerable uncertainty around
inflation, economic activity and changing expectations for central bank actions. During the month the ECB, Australia (unexpectedly), the UK, the
United States, Mexico and New Zealand central banks, all raised official cash rates.

For example, NZ interest rates were increased by 50bps when the market expected 25bps in response to “sticky” inflation. NZ inflation and growth, as a proxy for much of the developed world, is slowing albeit at a slower pace than central banks would like, and its likely short rates may need to be higher for longer. The risk being this may drag the mid curve higher. The longer end of the curve is inverted pricing - a slowing in activity and will likely follow the data. The long end is complicated as we give up yield investing longer, but there is the potential for greater capital gains from longer maturity bonds if rates move lower.