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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 | 1.75% | 3.71% | 6.34% | -2.12% | 0.41% |
| Appropriate Market Index (AMI)2 | 1.97% | 3.75% | 5.81% | -1.67% | 0.20% |
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 |
|---|---|
| Government National Mortgage Association 2 010953 6.00 Tba | 3.68% |
| Japan Government Of 090924 0.00 Gb | 3.08% |
| Japan Government 190824 0.00 Gb | 2.90% |
| Federal National Mortgage Association 250952 6.50 Tba | 2.59% |
| Ubs Collateral A/C | 1.83% |
| Japan Government Of 050824 0.00 Gb | 1.82% |
| Japan Government 010125 0.005 Gb | 1.69% |
| Japan Government Of 200634 1.10 Gb | 1.69% |
| Export Development Canada 180129 2.625 Gb | 1.53% |
| Gnma Ii 3O Year Single Family 201052 4.50 Mbs Pool Ma8347 | 1.46% |
Commentary
As of 31 July 2024
The fund outperformed its benchmark over the month.
Outperformance was driven by our Duration and Cross-Sector strategies, while our Securitized selection strategy detracted from excess returns.
Contributions from our Duration strategy were driven by our bias towards US curve steepening. This was driven by the rally at the front end, causing the US yield curve to steepen, with the 2 yr and 10yr maturities spread narrowing by 9bps, its tightest level since January 2024. Our overweight to front-end European rates also contributed, supported by market expectations for a European Central Bank (ECB) rate cut in September alongside the global rates rally. Likewise, our European curve steeper contributed.
Our Cross-Sector strategy also contributed to excess returns. This was driven by our overweight beta to mortgage-backed securities (MBS) and commercial mortgage-backed securities (CMBS). US MBS spreads tightening by 4bps and yields fell by 34bps considering the rates rallied in response to downside surprises to growth and inflation data, supporting fixed income risk asset outperformance as the market began to price in a US policy rate cut by September. Elsewhere, our marginal overweight beta to investment grade (IG) corporate credit also contributed, driven by a similar macro backdrop, as global IG spreads tightened by 2bps.
Lastly, our Securitized selection strategy underperformed. This was driven by our specific selection among non-agency MBS.