Single Sector Fund
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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
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.
Fergus is the head of Bonds and Currency 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 see's as a good investment. Fergus also talks us through the investment process and outlines the main reasons why you should consider the Corporate Bond Fund for your next investment.
One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
---|---|---|---|---|---|
Fund performance1 | 0.99% | 1.10% | 6.72% | 0.63% | 1.42% |
Appropriate Market Index (AMI)2 | 0.89% | 1.18% | 6.59% | 1.08% | 1.67% |
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 | 0.99% | 1.11% | 6.62% | 0.58% | 1.42% |
Appropriate Market Index (AMI)2 | 0.89% | 1.18% | 6.59% | 1.08% | 1.67% |
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 |
---|---|
Housing NZ 1.534% 10/09/2035 | 4.10% |
Insurance Australia Group Ltd 150628 5.32 Cb | 3.35% |
NZLGFA 3% 15/05/2035 | 3.21% |
Housing NZ 3.42% 18/10/2028 | 2.98% |
NZ Local Govt Funding Agency 150437 2.00 GB | 2.96% |
NZ Government 2.75% 15/04/2037 | 2.93% |
Westpac New Zealand Ltd 160932 6.19 Cb | 2.73% |
Chorus Ltd 4.35% 06/12/2028 | 2.45% |
Westpac New Zealand Ltd 140234 6.73 Cb | 2.41% |
Air New Zealand Ltd Sydney Branch 250529 6.50 Cb | 2.41% |
Commentary
As of 30 June 2024
Market Highlights
The fund had a positive return for the June quarter and outperformed the Bloomberg NZ Corporate Bond benchmark. The move higher in interest rates over April was unhelpful. Fortunately, the monthly income accrual and some moves lower in rates in May and June mitigated the impact of rising rates over the quarter.
The fund has a long duration with a view that the ultimate direction of rates is lower over the next 12-18 months.
With a supply shortage, credit holdings have helped in terms of providing a higher yield while margins have contracted somewhat. We prefer quality credit which is higher yielding than governments and currently has more supportive demand /supply dynamics too. We expect the market pricing/timing of rate cuts to bounce around but given the balance of risk we are happy to lock in higher rates for longer on opportunities.