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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 | -0.15% | 1.49% | 7.18% | 3.36% | 1.87% |
| Appropriate Market Index (AMI)2 | 0.06% | 1.47% | 7.67% | 3.83% | 2.30% |
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 | 3.91% |
| NZ Local Govt Funding Agency 150437 2.00 GB | 3.41% |
| Insurance Australia Group Ltd 150628 5.32 Cb | 3.21% |
| NZLGFA 3% 15/05/2035 | 3.01% |
| Westpac New Zealand Ltd 160932 6.19 Cb | 2.88% |
| Housing NZ 3.42% 18/10/2028 | 2.66% |
| Dunedin City Treasury 101033 4.966 Lb | 2.59% |
| Chorus Ltd 4.35% 06/12/2028 | 2.32% |
| Westpac New Zealand Ltd 140234 6.73 Cb | 2.26% |
| Air New Zealand Ltd Sydney Branch 250529 6.50 Cb | 2.25% |
Commentary
As of 31 January 2025
Market Overview
Fund Commentary
The fund returned -0.10% for January underperforming its benchmark the Bloomberg Credit Index which returned 0.06%.
The move higher in interest rates was the main driver of absolute and relative returns over the month. The longer duration position was unhelpful as both government and swap rates were higher, and swap rates had larger moves higher in yield than government bonds. Credit margins were stable and we still favour a higher yield through quality credit. The new issuance year is generally slow to start in NZ but ANZ will issue a 5-year bond early February which should receive good demand at a similar level to last year’s marks. We expect bonds can continue to perform well as cash rates are moved lower and investors seek value further along the curve. We reduced the fund’s longer duration position last quarter but still maintain a longer position as we believe a steep yield curve will remain, and expect carry and roll will support returns over the medium term.