Single Sector Fund

Nikko AM NZ Bond Fund

About the fund

The fund invests in a broad selection of NZ dollar denominated bonds issued by Governments, Government entities, banks and companies, providing investors with a regular income. The fund may experience modest ups and downs in value. 

Risk Indicator (volatility)

Target Asset Allocation

Bonds 100.00%

Commentary

As of 31 December 2021

Market Highlights

  • The NZ yield curve flattened in shape over December.
  • Credit margins have widened modestly over the quarter however we expect credit holdings will perform well with little supply expected until the end of the NZ holiday period.
  • The pipeline of new bond issuance appears to have slowed into year end.



The fund’s modest long duration position was a positive over the past month as longer maturity bonds performed better than shorter maturities. However, over the quarter the longer than benchmark position was a drag on performance as rates lifted strongly over October. We let this long position reduce into year-end to reduce risk as often the first quarter of the New Year is quite volatile in terms of interest rates moves. Fund performance was in line with the Bloomberg NZ Bond Composite benchmark. Yield curve positioning, credit and inflation linked bonds all adding to performance relative to benchmark.

Performance

Nikko AM Investment Scheme
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Performance

at 31 December 2021
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 0.64% -1.72% -6.01% 1.92% 3.26%
Appropriate Market Index (AMI)2 0.48% -1.70% -5.67% 1.21% 2.66%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: Bloomberg NZBond Composite 0+ year Index.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
NZ Govt Inflation Index Bond 20/09/25 10.41%
Kommunalbanken AS 1.25% 02/07/2030 5.90%
NZ Government Bond 2% 15/05/2032 3.72%
Westpac NZ 1.439% 02/24/26 3.48%
Kiwibank Ltd 2.155% 20/09/2024 2.86%
Housing NZ 3.42% 18/10/2028 2.73%
ASB Bank Ltd 040526 1.646 Cb 2.60%
Housing NZ 2.183% 24/04/2030 2.58%
NZ Local Govt Funding Agency 3.50% 14/04/2033 2.30%
Bank Of New Zealand Cash at Call 2.22%

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