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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.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 0.90% | 4.16% | 11.67% | 2.30% | 1.70% |
| Appropriate Market Index (AMI)2 | 1.00% | 4.05% | 10.99% | 2.78% | 2.06% |
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 | 4.11% |
| Rabo 5.31% 05/04/2029 | 3.67% |
| Insurance Australia Group Ltd 150628 5.32 Cb | 3.32% |
| NZ Local Govt Funding Agency 150437 2.00 GB | 3.29% |
| NZLGFA 3% 15/05/2035 | 3.19% |
| Housing NZ 3.42% 18/10/2028 | 2.96% |
| NZ Government 2.75% 15/04/2037 | 2.94% |
| Westpac New Zealand Ltd 160932 6.19 Cb | 2.70% |
| Chorus Ltd 4.35% 06/12/2028 | 2.41% |
| Westpac New Zealand Ltd 140234 6.73 Cb | 2.36% |
Commentary
As of 30 September 2024
The fund returned 4.25% over the quarter, outperforming its benchmark the Bloomberg Composite which returned 4.05%, by 0.21%. Performance in the September quarter was primarily driven by a dovish shift by the RBNZ and other global central banks. This pivot from a higher for longer inflation fighting stance to one of ongoing easing resulted in a strong rally with interest rates down across the curve. Over the quarter swap rates were down: 137bps at 2-year, 89bps at 5-year and 60bps at 10-Year. Similarly, NZGBs were down: 105bps at 2-year, 76bps at 5-year and 42bps at 10-year. The fund has held a long duration position in the range of 1.5 to 1.6 years longer than benchmark over the quarter. This strongly contributed to its outperformance. Whilst over the prior quarter duration was a strong driver of performance as we move forward, we expect smaller gains from this factor. Pleasingly as the RBNZ delivers on its expected easing program, we expect the return of a normal upward sloping yield curve which will provide the fund with opportunity to execute a carry and roll strategy which should positively contribute to future returns.