Quarterly performance of Mercer Overseas Shares Portfolio

For the quarter ended 30 September 2024, the Mercer Overseas Shares Plus Fund returned 1.6% and the Mercer Hedged Overseas Shares Plus Fund returned 5.5%. This meant that overall, the Mercer Overseas Shares Portfolio performed in line with its benchmark.

During the quarter, the performance of the investment managers who handle the portfolio varied. Wellington performed well after experiencing a sharp bounce back in excess returns. On the other hand, Alliance Bernstein had the lowest performance among the managers. This was mainly due to their weak selection of stocks, particularly in the information technology (‘IT’) sector where their holdings in semiconductor companies did not perform well.

At an overall level, the main factor that adversely affected the performance of the Mercer Overseas Shares Portfolio was having fewer investments and poor stock selection in the US. From a sector perspective, the selection of stocks in communication services had a positive impact, whereas the selection of stocks in the IT sector had a negative impact. At the individual stock level, having underweight investments in Nvidia and Apple helped improve relative performance, as did having an overweight investment in Meituan, a Chinese shopping platform which benefited from Chinese policymakers announcing stimulus measures and reporting better-than-expected quarterly results. On the other hand, having an overweight exposure to ASML had a negative impact. This company, which manufactures semiconductor equipment, was adversely affected by both lower demand for artificial intelligence stocks and reports that the US was looking to further restrict exports of semiconductor lithography equipment into China.