Single Sector Fund

Nikko AM Global Bond Fund

About the fund

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)

1
2
3 Medium
4
5
6
7

Target Asset Allocation

Bonds 100.00%

Commentary

As of 31 May 2022

Market Highlights

  • Central banks remain on a firm tightening trajectory given above-target inflation.
  • Performance of investment grade corporate markets was mixed and volatility continued throughout the month, driven by concerns around inflation. Investment grade credit spreads widened.





The portfolio underperformed the benchmark over the month of May. Underperformance was driven by Corporate credit while Emerging Market debt (EMD) strategy was the largest contributor to returns. Corporate credit selection strategy detracted from performance due to our overweight bias towards shorter-and-intermediate maturity versus longer-dated investment grade bonds. Our position detracted amid US investment grade credit curve flattening.  We remain constructive on investment grade corporate fundamentals, with robust corporate balance sheets providing an anchor, despite rising inflation and geopolitical uncertainty. We also believe corporate fundamentals can provide some cushion in the event of shocks to growth or persistently high inflation. Lastly, our EMD strategy was the largest contributor to performance, driven by various selection positions among external rates. Our overweight selection in Mexican and Saudi Arabian external rates contributed. Given the magnitude of the credit spread widening, we selectively added to issuers in the intermediate- and long-end of the credit curve in both primary and secondary markets, as well as through synthetics. This was most notable from a sector perspective, where we increased our overweight to financials.

(source: GSAM)

Performance

Nikko AM Investment Scheme
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Performance

at 31 May 2022
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 -0.08% -4.83% -8.00% 0.20% 1.47%
Appropriate Market Index (AMI)2 -0.14% -4.98% -6.94% -0.29% 1.38%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: Bloomberg Barclays Global Aggregate Index hedged into NZD.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Japan Government Of 110722 0.00 Gb 9.12%
Japan Government 150822 0.00 Gb 8.69%
Government Natioanla Mortgage Assoc 1506 2.48%
Fnma 30Yr Conventional 150639 0.00 Tba 2.47%
Federal National Mortgage Association 150643 0.0 Tba 1.91%
Federal National Mortgage Association 150649 0.00 Tba 1.84%
China People's Republic Of Government 130528 3.01 Gb 1.80%
Federal National Mortgage Assoc 150639 4 1.73%
Japan Government 200342 0.80 Gb 1.54%
Trysail Clo Ltd Series 21 1A Class A1 200732 Abs 1.53%

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