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 | Very 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 | 0.04% | -0.27% | -2.52% | 4.79% | 3.67% |
| Appropriate Market Index (AMI)2 | -0.37% | 0.19% | -1.23% | 3.82% | 3.46% |
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 |
|---|---|
| Japan Government 110422 0.0 Gb | 11.62% |
| Japan Government 011223 0.005 Gb | 2.53% |
| Japan Government 200931 0.10 Gb | 2.01% |
| Japan Government Of 200324 0.60 Gb | 1.36% |
| Trinitas Clo Ltd Sr 21 16A Class A1 150734 Abs | 1.36% |
| Trysail Clo Ltd Series 21 1A Class A1 200732 Abs | 1.36% |
| Japan Government 070322 0.00 Gb | 1.31% |
| Italy Republic Of Government 300124 0.00 Gb | 1.31% |
| Federal National Mortgage Association 150146 0.0 Tba | 1.23% |
| Japan Government 200941 0.50 Gb | 1.10% |
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Commentary
As of 31 December 2021
Market Highlights
The portfolio outperformed its benchmark over the month of December, driven by our Cross Sector and Corporate Selection strategies. On the other hand, our Securitized Selection strategy was the main detractor over the month. Our Cross Sector strategy was the main contributing strategy, driven mainly by our overweight in IG corporates and emerging market debt. While the spread of the Omicron variant continued to dominate headlines in December, concerns eased into the back-end of the month and markets adjusted focus to the expected path for central bank policy. Investment grade credit spreads tightened over December by 7bps to 97bps over sovereigns (as measured by the Bloomberg Barclays Global Aggregate Corporate Index). At the same time, Emerging Markets spreads also tightened over the month (as measured by the J.P. Morgan EMBI Global Diversified Index), which contributed to our excess returns. Within our Corporate Selection strategy, excess returns came most notably from our overweight in short- and intermediate-maturity versus longer-dated corporates. We continue to hold this positioning due to attractive carry and roll. Our overweight in euro-denominated corporate bonds and our bias to down-in-quality issuers also contributed. Our Securitized Selection strategy was the largest detractor over the month, owing to our agency MBS selection in derivatives and passthroughs. The fund underperformed over the quarter – attributable to October month, namely our Country (-34bps) and Duration strategies (-31bps). The underperformance of our Country strategy was driven by our relative value overweight positions in Australian and Canadian rates. Australian rates sold off as the market accelerated the pricing of rates (particularly after better-than-expected CPI release), driving the underperformance of our relative value positions (e.g. overweight Australian versus Norwegian rates). Additionally, our overweight Canadian versus US rates exposure detracted following a hawkish surprise from the Bank of Canada. Our Duration strategy also detracted owing to our overweight in Canadian and Australian front-end rates as well as our UK curve steepener position. Front-end rates sold off amid hawkish central bank communication and continued rising inflationary pressures. Our UK curve steepener also detracted as we were underweight the mid part of the curve which outperformed amid the market moves.
(source: GSAM)