Single Sector Fund
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The fund invests in a selection of bonds and other fixed income instruments issued by companies and governments from around the world, covering a wide range of regions and sectors. This fund provides exposure to fixed income products outside of NZ and currency exposure is hedged to remove the impact of changes in value of the NZ dollar.
Risk Indicator (volatility)
Target Asset Allocation
This number indicates the relative 'risk' level of this fund based on the types of assets it is invested in, ranging from level 1 (least risky) to 7 (most risky).
| Risk category | Description of volatility |
| 1 | Very low |
| 2 | Low |
| 3 | Medium |
| 4 | Medium to High |
| 5 | High |
| 6 | Very high |
| 7 | Extremely high |
The risk indicators are calculated using returns of the funds, the returns of the fund’s market index or a combination of both, for the previous five years. Index returns or a mix are used if the fund has existed for less than five years. All Managers are required to use the same methodology so you can compare the risk of different funds if you are researching more than one manager.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 1.39% | 0.30% | 4.91% | -2.25% | 0.19% |
| Appropriate Market Index (AMI)2 | 0.87% | 0.08% | 3.82% | -1.91% | -0.05% |
AMI (appropriate market index) is a theoretical portfolio with similar underlying assets as the fund. This allows investors to see a comparison of how the value of those assets have changed in the market relative to the fund.
| Security Name | Percentage |
|---|---|
| Gnma Ii 30Yr Single Family 200753 6.00 Tba | 3.66% |
| Japan Government Of 090924 0.00 Gb | 2.88% |
| Japan Government 190824 0.00 Gb | 2.71% |
| Japan Government Of 050824 0.00 Gb | 2.62% |
| Fncl 250742 0.0 Tba | 1.91% |
| Japan Government 200630 0.10 Gb | 1.70% |
| Japan Government 010125 0.005 Gb | 1.58% |
| Export Development Canada 180129 2.625 Gb | 1.50% |
| Future Margins-USD | 1.46% |
| Gnma Ii 3O Year Single Family 201052 4.50 Mbs Pool Ma8347 | 1.45% |
Commentary
As of 30 June 2024
Market Highlights
The portfolio outperformed its benchmark over the month and quarter. This was driven by our Country and Corporate selection strategies, respectively. By contrast, our Duration strategy detracted from excess returns. Contributions from our Country strategy were driven by our cross-market overweight to short-end Sweden and Canadian versus Australian rates. Both the Riksbank and Bank of Canada (BoC) embarked on their cutting cycle over the quarter, contributing to our position. Meanwhile, strong economic data prompted the Reserve Bank of Australia (RBA) to consider resuming rate hikes. Our overweight New Zealand versus Japan rates position also contributed. This was primarily driven by our underweight to Japanese rates. The Bank of Japan (BoJ) grew less dovish over the quarter. Indeed, hawkish remarks from the central bank saw the 10-year Japanese government bond yield exceed 1% for the first time since 2012 in May. Meanwhile, contributions from our Corporate selection strategy were driven by our bias towards steepening of the investment grade (IG) corporate credit curve. This entails an overweight position on the short-to-medium maturity portion of the curve and underweight the long-end. Both components contributed to our steepener position. Our preference to be overweight BBB-rated IG credits also contributed to excess returns.
Our Duration strategy underperformed. This was primarily driven by our discretionary overweight to US rates. We held this position into the second quarter in anticipation of further disinflation and eventual US Federal Reserve (Fed) policy easing. We reduced this position over the quarter considering stronger-than-expected data and amid US rate volatility.