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)

1
2
3 Medium
4
5
6
7

Target Asset Allocation

Bonds 100.00%

Commentary

As of 31 May 2022

Market Highlights

  • Bond markets had their first positive month this year.
  • The shape of the swap yield curve remains flat.
  • New issuance has been modest and credit margins reasonably stable.

The strategy had a positive month due to a move lower in the mid part of the yield curve. Performance was in line with the Bloomberg NZ Bond Composite benchmark. Swap margins expansion relative to similar maturities of governments was unhelpful for returns as the fund generally holds less government bonds due to their lower yield and more credit which is priced as a margin above swap. The bond fund has been positioned close to benchmark duration as we have wanted to have less risk in uncertain times. Duration has varied between slightly short to slightly long since 2021 year-end. The fund achieves a high yield from credit and holding inflation linked government bonds where appropriate which should benefit returns. A gradual recycle into new deals at higher levels is our plan. We also continue selling bonds that look expensive and switching into more defensive/liquid holdings.

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 0.13% -4.00% -8.06% -1.33% 1.33%
Appropriate Market Index (AMI)2 0.22% -3.74% -7.87% -1.78% 0.91%
  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 11.84%
Kommunalbanken AS 1.25% 02/07/2030 5.76%
Westpac NZ 1.439% 02/24/26 3.54%
Westpac New Zealand Ltd 160227 3.696 Cb 3.32%
Kiwibank Ltd 2.155% 20/09/2024 2.95%
NZ Government Bond 2% 15/05/2032 2.86%
Housing NZ 3.42% 18/10/2028 2.70%
ASB Bank Ltd 040526 1.646 Cb 2.62%
Housing NZ 2.183% 24/04/2030 2.50%
NZ Local Govt Funding Agency 3.50% 14/04/2033 2.16%

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