Single Sector Fund

Nikko AM NZ Bond Fund

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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
4 Medium to High
5
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7

Target Asset Allocation

Income 100.00%

Find out more about the NZ bond fund from Ian Bellow

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.

Commentary

As of 31 March 2025

Market Overview

  • Bond returns were positive for the quarter after some volatility from month to month with uncertainty buffeting markets.
  • The NZ yield curve remains steep and should garner more investor interest at some stage with longer government bond trading higher than swap rates.
  • NZ bond issuance remains limited which should continue to support credit margins.

Fund Commentary

The fund returned 0.16% for the month of March and 0.64% for the quarter. Performance for the quarter was close to benchmark - the Bloomberg Composite that returned 0.69%.

The higher income accrual was the main positive attributor of return over the quarter, with the longer duration positioning unhelpful as rates moved modestly higher. Credit holdings continued to perform well with limited new issuance. The outperformance of the government bond sector was relatively neutral for the fund. We continue to maintain a longer duration with a steep yield curve and expect carry and roll will support returns over the medium term.

Performance

Nikko AM Investment Scheme
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Performance

at 31 March 2025
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 0.09% 0.49% 6.34% 3.32% 1.06%
Appropriate Market Index (AMI)2 0.15% 0.69% 6.15% 2.87% 0.25%
  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 Government 150534 4.25 Gb 7.98%
NZ Government 2.75% 15/04/2037 7.26%
NZ Government 150541 1.75 GB 7.04%
New Zealand Government 150535 4.50 Gb 4.77%
Nzlgfa 4.5% 15/05/2030 3.64%
New Zealand Government 150531 1.50 Gb 3.01%
Rabo 5.31% 05/04/2029 2.70%
NZ Government Bond 2% 15/05/2032 2.62%
Housing NZ 1.534% 10/09/2035 2.45%
Bank Of New Zealand 191129 4.889 Cb 2.10%
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