The New Zealand Growth Fund returned -0.9% in October, compared to its benchmark return of -0.3%.  

The key detractors were Infratil (-12%) and Summerset (-12%), with positive performance from Xero (+9%).  

Infratil released its CDC Data Centres quarterly independent valuation update, which saw the value of its share down A$45m to A$9.2 billion (a relatively minor -0.5%). The decrease was attributed to the impact of increasing interest rates on CDC's funding costs and a higher required rate of return. Broader concerns around the artificial intelligence (AI) ecosystem weighed on the sector during the month, including data centres. Within the Australian sector, Firmus cancelled its initial public offering, while peer data centre company NextDC encountered community opposition to its M3 site in suburban Melbourne, delaying the powering of the project. The key takeaway is that while CDC has built a high-quality business and is delivering to expectations (in fact, it increased its profit guidance in September), it is not immune to swings in sentiment in the sector, or the potential for knock-on effects in some areas of the global AI ecosystem. It has been reassuring to see key Infratil team members who already have significant "skin in the game" buying millions of dollars’ worth of additional Infratil shares on market.  

Summerset delivered a mixed September quarter sales update, with strong resales activity (+36% on the same quarter last year) offset by softer new sales (down -28% against a particularly strong quarter). Subdued housing-market conditions are having an impact, making it harder for some prospective residents to sell their existing homes. Encouragingly, underlying new sales activity improved, 20% higher than in the first two quarters of 2026 and broadly in line with the same period last year. The company has seen no material change in contracting rates following the increase in its deferred management fee from 25% to 30% in August. Overall, the update reinforces the strength of demand for Summerset’s existing villages, but subdued housing-market conditions are impacting new sales velocity.  

October annual meetings meant we saw a swathe of performance or guidance updates from portfolio companies including EBOS (+5%), Vulcan Steel (+3%), Freightways (+2%), Auckland Airport (+1%), Skellerup (-1%), Port of Tauranga (-1%), and Serko (-8%).