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The fund invests in a selection of bonds and other fixed income instruments issued by companies and governments from around the world, covering a wide range of regions and sectors. This fund provides exposure to fixed income products outside of NZ and currency exposure is hedged to remove the impact of changes in value of the NZ dollar.
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 | -0.85% | -1.65% | 2.78% | -1.40% | 0.28% |
| Appropriate Market Index (AMI)2 | -0.88% | -1.20% | 3.03% | -1.04% | 0.18% |
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 |
|---|---|
| United States Treasury 250225 0.00 Gb | 6.27% |
| France Republic Of Government 080125 0.00Gb | 5.74% |
| Japan Treasury Disc Bill 250225 0.00 Gb | 4.22% |
| Rbc Collateral A/C | 4.03% |
| Federal National Mortgage Associtation 150144 0.00 Tba | 3.48% |
| French Discount T Bill 050225 0.00 Gb | 2.84% |
| Japan Treasury Disc Bill 200125 0.00 Gb | 2.36% |
| Federal National Mortgage Association 150144 0.00 Tba | 2.05% |
| Federal National Mortgage Association 150146 0.0 Tba | 2.02% |
| French Discount T-Bill 220125 0.00 Gb | 1.85% |
Commentary
As of 31 December 2024
Fund Commentary
The portfolio underperformed its benchmark in the fourth quarter of 2024. The Government Swap Selection and Duration strategies detracted, while the Corporate Selection strategy performed well.
The steepener position in European rates was the main driver of underperformance in the Government Swap Selection strategy. In October, European rates sold off, and the curve flattened. This was driven by upside surprises to GDP and inflationary data at the end of the month, which raised doubts surrounding the trajectory of ECB rate cuts.
The duration strategy also detracted from returns as a result of the portfolio being overweight to UK rates. UK rates sold off following the announcement of larger-than-expected gilt issuance for the current fiscal year, with the yield at the 2-year node – where the views were primarily expressed – increasing by over 40bps.
Corporate Selection strategy contributed to excess returns. This was driven by the portfolio’s down-in-quality bias within IG corporates, as BBB-rated bonds outperformed their higher-quality counterparts over the quarter. There was also a contribution from the overweight allocation to the intermediate-maturity part of the corporate credit curve, which is implemented to harvest carry-and-roll.