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The fund invests in a broad selection of NZ dollar denominated bonds issued by Governments, Government entities, 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.
Ian is a Fixed Income Manager here at Nikko AM. In this video, Ian talks about the NZ Bond Fund and describes what this fund aims to achieve in terms of returns. Ian also explains what sets this fund apart from the rest and why you should consider the NZ Bond Fund for your next investment.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | -0.27% | 1.21% | 6.52% | 2.09% | 0.76% |
| Appropriate Market Index (AMI)2 | -0.04% | 1.14% | 6.29% | 1.66% | 0.28% |
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 Government 150534 4.25 Gb | 7.22% |
| NZ Government 2.75% 15/04/2037 | 7.14% |
| NZ Government 150541 1.75 GB | 6.26% |
| New Zealand Government 150535 4.50 Gb | 4.08% |
| Nzlgfa 4.5% 15/05/2030 | 3.72% |
| New Zealand Government 150531 1.50 Gb | 3.41% |
| Rabo 5.31% 05/04/2029 | 2.85% |
| NZ Government Bond 2% 15/05/2032 | 2.70% |
| Housing NZ 1.534% 10/09/2035 | 2.53% |
| Dunedin City Treasury 101033 4.966 Lb | 2.16% |
Commentary
As of 31 January 2025
Market Overview
Fund Commentary
The fund returned -0.23% for January an underperformance of its benchmark the Bloomberg Composite which returned -0.04%.
The move higher in interest rates was a key driver of absolute and relative returns. The outperformance of government bonds (which make up over 60% of the benchmark) was also unhelpful on a relative basis. We reduced the fund’s longer duration position last quarter but still maintain a longer position as we believe a steep yield curve and carry and roll investment strategies will support returns over the medium term. Credit margins have remained stable although credit is priced as a margin above swap rates which had larger moves higher in yield than government bonds last month.
We continue to favour adding quality credit to maintain a higher fund yield which has proved a consistent value add over time. We expect bonds can continue to perform well as cash rates are moved lower and in turn investors seek value further along the yield curve. The upward sloping yield curve will provide the fund with opportunity to execute a carry and roll strategy which should provide an additional contribution to future returns.