Single Sector Fund

Nikko AM Conservative Fund

About the fund

This fund aims for more modest investment returns which grow steadily over time, keeping ups and downs to a minimum. The fund does this by investing mostly in bonds and cash, but also has a moderate exposure to shares.

Risk Indicator (volatility)

1
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3 Medium
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7

Target Asset Allocation

Growth 23.00%
Income 57.00%
Other 20.00%

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Commentary

As of 31 December 2023

Market Highlights

  • Markets performed strongly in December, continuing from where November left off to close out what has been another remarkable year.
  • Yields fell in most bond markets around the world on hopes major central banks would soon cut rates as inflation readings have continued to soften. The Bloomberg Global Agg Index (NZD Hedged) returned 3.1% for December, and 5.7% for 4Q.
  • Equity markets were also strong, with MSCI ACWI Index (NZD Hedged) up 4.0% for December and 8.9% for the quarter.

The fund performance was strong in terms of absolute return and relative returns for the final quarter of 2023 with both equities and bonds delivering strong returns. Global shares were the main detractor in terms of relative returns over the quarter and year. The portfolio is overweight healthcare which was one of the weakest sectors for the quarter, and stock selection within industrials (Rentokil, Transunion and KBR), Financials (Ryan Specialty) and Energy (Schlumberger and ChampionX Corp) was a detractor. On the positive side stock selection in Info Tech (Hexagon AB and Microsoft) and Communications (Netflix) added to relative returns. Both the NZ and global bond portfolios added value over both the quarter and the full year. The NZ portfolios have been long duration, positioned for a fall in interest rates which finally eventuated in November and December, while the global bond fund benefited from country positioning and cross-sector strategies such as investment grade credit.

Performance

Nikko AM Investment Scheme
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Performance

at 31 December 2023
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 2.85% 5.17% 7.17% -0.56% 3.26%
Appropriate Market Index (AMI)2 2.61% 4.88% 7.77% 0.22% 3.56%
  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
NZ Government 2.75% 15/04/2037 2.45%
NZ Government 150534 4.25 Gb 1.88%
Japan Government 150124 0.00 Cb 1.50%
NZ Govt Inflation Index Bond 20/09/25 1.43%
Housing NZ 1.534% 10/09/2035 1.37%
Japan Government 190224 0.00 Gb 1.17%
Rabobank Nederla 160326 Frn 1.16%
Westpac New Zealand 060726 Frn 1.12%
Mufg Bank Ltd Auckland Branch 241126 Frn 0.94%
Goodman Property Trust 0.93%
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