Single Sector Fund

Nikko AM Balanced Fund

About the fund

This fund aims for a steady investment return over the medium to longer term without too many ups and downs. The fund does this by investing across a range asset classes with  exposure to shares for growth complemented by exposure to bonds and alternatives to reduce volatility.

Risk Indicator (volatility)

1
2
3
4 Medium to High
5
6
7

Target Asset Allocation

Equities 55.00%
Bonds 30.00%
Other 15.00%

Commentary

As of 31 March 2022

Market Highlights

  • Bond markets continued to be the focus of much attention during March as interest rates continued their push higher resulting in ‘mark-to-market’ losses for bond funds (i.e. when interest rates move higher, your holdings of older bonds with a lower interest rate are worth less). 
  • The NZ dollar, perhaps surprisingly in a ‘risk off’ environment strengthened appreciably over the month resulting in enhanced returns for foreign currency investments that were hedged back to the NZ dollar.




 

The generally strong returns from equities offset the losses in bonds, the ARK fund and the Option fund.  The ARK fund has lost around a third of its value since the start of the year, and the Option Fund’s losses were due to the rapid increase in US interest rates upon which the option contracts are written.  Day-to-day volatility remains elevated across all sectors, serves as a reminder that good diversification is an important aspect of portfolio construction.  As we finalise this year’s strategic asset allocation review we note that the higher interest rate environment will ultimately lead to higher expected returns over time, albeit that the journey will continue to provide significant jolts both upwards and downwards especially in equity markets.  We remain firmly of the view that equities will outperform bonds over the longer term and that bonds will outperform cash, but that the more defensive sectors still have a role to play in the overall portfolio.

Performance

Nikko AM Investment Scheme
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Performance

at 31 March 2022
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 0.08% -6.29% -1.16% 5.67%
Appropriate Market Index (AMI)2 0.54% -4.95% 1.00% 7.29%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: Composite - refer to Nikko AM NZ Investment Scheme OMI.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
JPM Multi Manager Alternatives X Acc NZD Hedged 10.07%
Fisher & Paykel Healthcare 2.47%
Infratil Limited 1.90%
Microsoft Corp 1.76%
Spark New Zealand Ltd 1.68%
Contact Energy Limited 1.64%
NZ Govt Inflation Index Bond 20/09/25 1.48%
EBOS Group Limited 1.39%
Fletcher Building Ltd 1.19%
Japan Government 110422 0.0 Gb 1.15%

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