Single Sector Fund
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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
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.
Ian is a Fixed Income Manager here at Nikko AM. In this video, Ian talks about the NZ Bond Fund and describes what this fund aims to achieve in terms of returns. Ian also explains what sets this fund apart from the rest and why you should consider the NZ Bond Fund for your next investment.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 1.25% | 1.00% | 5.87% | -0.64% | 0.37% |
| Appropriate Market Index (AMI)2 | 0.98% | 0.80% | 5.39% | -1.08% | -0.22% |
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 |
|---|---|
| NZ Government 150534 4.25 Gb | 10.06% |
| NZ Government 2.75% 15/04/2037 | 8.46% |
| NZ Government 150541 1.75 GB | 4.63% |
| New Zealand Government 150535 4.50 Gb | 4.38% |
| Housing NZ 1.534% 10/09/2035 | 3.78% |
| NZ Local Govt Funding Agency 150437 2.00 GB | 3.31% |
| Kommunalbanken AS 1.25% 02/07/2030 | 3.04% |
| Bank Of New Zealand 010928 0.00 Cb | 2.46% |
| NZ Government Bond 2% 15/05/2032 | 2.42% |
| Auckland Council 170639 5.745 Cb | 1.97% |
Commentary
As of 30 June 2024
Market Highlights
The fund had a positive return for the quarter and outperformed the Bloomberg NZ Composite benchmark. The move higher in interest rates over April was unhelpful. Fortunately, the monthly income accrual and some moves lower in rates in May and June mitigated the impact of rising rates over the quarter.
We have continued to add longer maturity bonds when yields were high to extend our relative position. The fund is positioned with a long duration with a view that the ultimate direction of rates is lower over the next 12-18 months. Our preference is to hold higher yielding quality credit, but we have added NZ government bonds when they look cheap relative to swap. NZ government bonds are approximately 2/3rds of the benchmark.