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 | -0.65% | 1.77% | 5.36% | -2.40% | 0.80% |
Appropriate Market Index (AMI)2 | -0.70% | 2.16% | 5.12% | -2.04% | 0.64% |
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 Of 070524 0.00 Gb | 2.72% |
Japan Government 200630 0.10 Gb | 1.92% |
Japan Government 010125 0.005 Gb | 1.76% |
Japan Government 200931 0.10 Gb | 1.62% |
Japan Government 010724 0.005 Gb | 1.56% |
Future Margins-USD | 1.55% |
Export Development Canada 180129 2.625 Gb | 1.55% |
Gnma Ii 3O Year Single Family 201052 4.50 Mbs Pool Ma8347 | 1.55% |
Fnma Fncl 250853 7.00 Tba | 1.49% |
Cx003113 Ccp Long Sell Cds Usd 200628 Rfxd1pflticecdcdxig540 | 1.44% |
Commentary
As of 29 February 2024
Market Highlights
The portfolio underperformed its benchmark over the month. This was driven by our Duration and Government/Swaps selection strategies. By contrast, our Corporate selection strategy contributed to excess returns.
Detraction of our Duration strategy was driven by our forward steepener and directional underweight positions on US rates. Upside surprises in labour market and inflation data, as well as markets pushing back expectations for the Fed cutting cycle, led to flattening of the US yield curve and a spike in yields across the curve. Our position on the 7-year node of the US yield curve, where we were overweight, particularly underperformed.
Our Government/Swaps selection strategy also underperformed. This was driven by our US and European steepener positions. In Europe, the number of interest rate cuts priced to end-2024 also fell, front-end yields rose, and longer-maturity bonds outperformed shorter-dated counterparts. This saw the European yield curve flatten, challenging our position. Meanwhile, our Corporate selection strategy contributed to excess returns. This was driven by our preference to be overweight the short-to-intermediate part of the IG corporate curve. Over the month, 1-3 and 3-5 year portions of the IG curve tightened by 6bps and 8bps, respectively. Our down-in-quality bias among IG corporates also contributed.