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This fund invests in a selection of NZ dollar denominated cash investments and short-term bonds that aim to protect value while at the same time providing a higher return than bank deposits.
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.
Matt is a Fixed Income Manager 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 sees as a good investment. Matt also talks us through the investment process and outlines the main reasons why you should consider the Cash Fund for your next investment.
| One month | Three months | One year | Three years (p.a) | Five years (p.a) | |
|---|---|---|---|---|---|
| Fund performance1 | 0.48% | 1.51% | 6.19% | 4.13% | 2.92% |
| Appropriate Market Index (AMI)2 | 0.47% | 1.43% | 5.79% | 3.92% | 2.58% |
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 | 0.48% | 1.50% | 6.16% | 4.03% | 2.82% |
| Appropriate Market Index (AMI)2 | 0.47% | 1.43% | 5.79% | 3.92% | 2.58% |
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 Local Govt Funding Agency 150425 2.75 GB | 5.34% |
| Rabobank Nederla 160326 Frn | 4.58% |
| Westpac New Zealand 060726 Frn | 4.40% |
| Mufg Bank Ltd Auckland Branch 241126 Frn | 3.95% |
| Industrial And Commercial Bank Of China Nzd 260525 Frn | 3.19% |
| New Zealand Tax Trading Co 041124 Rcd | 3.06% |
| Bank Of New Zealand 231126 Frn | 2.72% |
| Kiwibank Ltd 2.155% 20/09/2024 | 2.71% |
| China Construction Bank Nz Ltd 090226 Frn | 2.57% |
| Dunedin City Treasury 080727 Frn | 2.41% |
Commentary
As of 31 August 2024
The fund performed well in August returning 0.52% outperforming its benchmark the 90-day Bank Bill Index which returned 0.47%.
The fund’s duration position ended the month at 90 days, 45 days longer than benchmark. This long duration position positively contributed to fund performance over August as short maturity rates fell by approximately 30 bps . The market is pricing a more aggressive rate cut profile than the RBNZ forecast pricing implies over the coming year with the cash rate around 4% in Feb 25. We agree the NZ economy has slowed significantly and there is the possibility of a 50-bps rate cut at some stage, but the magnitude and timing of cuts will remain tied to the inflation and economic data going forward.
In terms of investing the yield curve is inverted with the OCR at 5.25% and 1-year swap at 4.40%. We want to maintain a higher yield on the fund balanced against locking in higher rates for longer through investing out to one year. Fortunately, the fund is able to invest at levels higher than the bank bill or swap rates through adding quality credit. We will continue to look for opportunities to maintain and add duration positions on any backups in yield however remain cautious given markets high expectations for OCR cuts.