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 | 1.27% | -0.24% | 4.74% | -1.96% | 0.69% |
| Appropriate Market Index (AMI)2 | 0.91% | -0.02% | 3.80% | -1.60% | 0.48% |
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 200630 0.10 Gb | 1.97% |
| Japan Government 010125 0.005 Gb | 1.81% |
| Japan Government 200931 0.10 Gb | 1.66% |
| Export Development Canada 180129 2.625 Gb | 1.62% |
| Gnma Ii 3O Year Single Family 201052 4.50 Mbs Pool Ma8347 | 1.61% |
| Japan Government 010724 0.005 Gb | 1.61% |
| Government National Mortgage Association 200448 0.00 Tba | 1.50% |
| Cx003113 Ccp Long Sell Cds Usd 200628 Rfxd1pflticecdcdxig540 | 1.50% |
| Kfw 101028 3.125 Gb | 1.45% |
| Trinitas Clo Ltd Sr 21 16A Class A1 150734 Abs | 1.37% |
Commentary
As of 31 March 2024
Market Highlights
The portfolio outperformed its benchmark over the first quarter. This was driven by our cross-sector and corporate selection strategies, respectively. By contrast, our emerging market debt (EMD) strategy detracted from excess returns. Our cross-sector strategy was supported by broad-based credit spread tightening over the quarter, driven by stronger-than-expected US data which raised hopes of a soft economic landing. Our sector overweight to securitized credit, particularly among commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLO) outperformed. Our sector overweight to investment grade (IG) credit also contributed as US IG spreads tightened by 11bps.
Our corporate selection strategy also contributed. This was driven by several factors. First, our bias towards BBB-rated bonds contributed with spreads tightening by around 12bps over the quarter. Our overweight to financials versus non-financials also contributed as financials spreads tightening by 16bps quarter-on-quarter (QoQ). Lastly, our IG curve steepener benefited from the shorter-dated portion of the IG curve outperforming the long-end. By contrast, our EMD selection strategy detracted. This was mainly driven by our overweight position on external Hungarian debt. Concerns around Hungary and European Union relations, and thus uncertainty around sources of funding for Hungary kept bonds under pressure. Meanwhile, the spread change between Hungary and the emerging market bond index remained wide over the quarter.