Single Sector Fund

Nikko AM NZ Corporate Bond Fund

About the fund

The fund invests in a  selection of NZ dollar denominated bonds issued by 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

Bonds 100.00%

Commentary

As of 31 December 2021

Market Highlights

  • Credit margins have widened modestly over the quarter however we expect credit holdings will perform well with little supply expected until the end of the NZ holiday period.
  • The pipeline of new bond issuance appears to have slowed into year end.




The fund’s modest long duration position was a drag on returns over the quarter.   This long position reduced into year-end to reduce risk as often the first quarter of the New Year is quite volatile in terms of interest rates moves. Yield curve positioning, including a higher fund yield was helpful. Large increases in interest rates over October resulted in the negative returns for the fund over the quarter returns – although it is worth noting the Bloomberg NZ Bond Credit benchmark has modest interest rate risk with a duration of 3.11 years. This duration is significantly less than many other fixed income indices

 

 

Performance

Nikko AM Investment Scheme
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Performance

at 31 December 2021
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 0.39% -1.67% -4.51% 2.29% 3.58%
Appropriate Market Index (AMI)2 0.36% -1.28% -3.44% 2.19% 3.40%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: Bloomberg NZBond Credit 0+ year Index.

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Westpac NZ 1.439% 02/24/26 4.05%
Housing NZ 3.42% 18/10/2028 3.68%
Kiwibank Ltd 2.155% 20/09/2024 2.95%
ASB Bank Ltd 040526 1.646 Cb 2.93%
Westpac NZ 2.22% 29/07/24 2.81%
ANZ NZ 3.03% 20/03/2024 2.27%
ASB Bank Ltd 1.83% 08/19/2024 2.21%
Insurance Australia Group Ltd 150643 5.15 CB 2.17%
New Zealand Inland Revenue 060522 Rcd 2.15%
China Construction Bank New Zealand Ltd 250923 0.954 Cb 2.06%

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