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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.
Matt is a Fixed Income Manager at Nikko AM. In this video, he explains what an average day in his job looks like, what he's trying to achieve with this portfolio, and what he sees as a good investment. Matt also talks us through the investment process and outlines the main reasons why you should consider the Cash Fund for your next investment.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 0.49% | 1.57% | 6.22% | 4.29% | 2.99% |
| Appropriate Market Index (AMI)2 | 0.45% | 1.42% | 5.79% | 4.07% | 2.66% |
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 | 0.49% | 1.56% | 6.20% | 4.19% | 2.88% |
| Appropriate Market Index (AMI)2 | 0.45% | 1.42% | 5.79% | 4.07% | 2.66% |
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 Local Govt Funding Agency 150425 2.75 GB | 5.34% |
| Rabobank Nederla 160326 Frn | 4.58% |
| Westpac New Zealand 060726 Frn | 4.40% |
| Mufg Bank Ltd Auckland Branch 241126 Frn | 3.95% |
| Industrial And Commercial Bank Of China Nzd 260525 Frn | 3.19% |
| New Zealand Tax Trading Co 041124 Rcd | 3.06% |
| Bank Of New Zealand 231126 Frn | 2.72% |
| Kiwibank Ltd 2.155% 20/09/2024 | 2.71% |
| China Construction Bank Nz Ltd 090226 Frn | 2.57% |
| Dunedin City Treasury 080727 Frn | 2.41% |
Commentary
As of 30 September 2024
The fund performed well in the September quarter returning 1.61% outperforming its benchmark the 90-day Bank Bill Index which returned 1.42%. Over quarter interest rates meaningfully fell, primarily driven the RBNZ pivoting to easing in August and the Fed opening its easing cycle with an aggressive 50bps cut in September. Further contributing to these falls were a set of weak economic data showing declining inflation and inflation expectations along with ongoing weak growth and labour market statistics. 90-day bills fell 76bps to 4.87%, 6-month bills fell 101bps to 4.61% and 1-year swap fell a remarkable 130bps to 4.07%. Correspondingly the fund’s long duration position positively contributed to performance. Whilst long duration has been a positive contributor, we are cautious as to its future performance. Markets have rapidly increased bets around the pace and magnitude of cuts. As of September month-end some 89bps of cuts are priced for 2024, whilst a sub 3% OCR is priced one year ahead. By comparison at the end of June markets were expecting a year end OCR of ~5.2% only 6bps below todays level. Likewise, the RBNZ’s August MPS delivered only 7 weeks ago guides for an OCR average over the quarter of 4.9% for 4Q24 and one of 3.8% for 4Q25, both well above market pricing. Whilst we thoroughly agree that the OCR is coming down, we are cautious and see potential for the market to be disappointed with the pace at which cuts are delivered. In light of this whilst we continue to expect to hold a long duration position, we see risk mitigating value in holding sub 3-month positions and floating notes.