Single Sector Fund
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This fund invests in a selection of NZ dollar denominated cash investments and short-term bonds that aim to protect value while at the same time providing a higher return than bank deposits.
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 | 0.14% | 0.26% | 0.77% | 1.19% | 1.72% |
Appropriate Market Index (AMI)2 | 0.13% | 0.33% | 0.76% | 0.77% | 1.24% |
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.
One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
---|---|---|---|---|---|
Fund performance1 | 0.13% | 0.23% | 0.64% | 1.11% | |
Appropriate Market Index (AMI)2 | 0.13% | 0.33% | 0.76% | 0.77% |
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 |
---|---|
HSBC Bank New Zealand 111124 Frn | 5.24% |
Rabobk Nfix3fra + 38 28/06/2024 | 4.83% |
Bank Of China | 4.33% |
Bank Of New Zealand 180324 Frn | 4.23% |
Industrial And Commercial Bank Of China Nzd 260525 Frn | 3.80% |
Bank Of New Zealand Cash at Call | 3.03% |
Inland Revenue Deposit 210622 Rcd | 2.57% |
Mufg Bank Ltd Auckland Branch 051124 Frn | 2.52% |
New Zealand Tax Trading Co 220622 Rcd | 2.42% |
Toyota Finance New Zealand Ltd 230525 Frn | 2.11% |
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Commentary
As of 31 May 2022
Market Highlights
The strategy outperformed in May returning 0.16% versus its 90-day bank bill index which returned 0.13%. The fund has been implementing a barbel investment strategy, with short positions concentrated around the upcoming Reserve Bank meeting dates complemented with some longer positions to take advantage of higher rates offered for tenor. Going into the May RB meeting date the fund had over one third of its securities due to mature inside one month including circa 6.5% in cash. These positions have or will shortly be reinvested at higher prevailing rates. At the same time the fund’s longer positions have added value primarily through the accrual of their yield advantage. As mentioned in our market commentary, current pricing is such that investors are well compensated for taking bank bill positions out towards 1-year in term. To put some numbers around this, at our time of writing an investment of 1-year in term would offer a return gain of some 0.32% over a strategy of sitting in call cash should the RB implement a hiking profile consistent with its forecast OCR track. (This being two further 0.50% increases followed by three 0.25% increases). Credit spreads further enhance this prospective advantage to the tune of 0.20-0.40%. We continue to remain comfortable with our strategy of taking short positions around upcoming RB meeting dates combined with longer positions when we see fair value versus our expected OCR track.