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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 | 1.03% | 0.96% | 7.00% | 3.21% | 2.17% |
| Appropriate Market Index (AMI)2 | 1.06% | 1.26% | 7.39% | 3.65% | 2.48% |
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 | 4.00% |
| NZ Local Govt Funding Agency 150437 2.00 GB | 3.50% |
| Insurance Australia Group Ltd 150628 5.32 Cb | 3.20% |
| NZLGFA 3% 15/05/2035 | 3.08% |
| Westpac New Zealand Ltd 160932 6.19 Cb | 2.90% |
| Bank Of New Zealand Cash at Call | 2.82% |
| Housing NZ 3.42% 18/10/2028 | 2.69% |
| Dunedin City Treasury 101033 4.966 Lb | 2.63% |
| Chorus Ltd 4.35% 06/12/2028 | 2.34% |
| Westpac New Zealand Ltd 140234 6.73 Cb | 2.29% |
Commentary
As of 31 December 2024
Fund Commentary
The fund returned 1.08% for December and outperformed its benchmark the Bloomberg Credit Index which returned 1.06%. Returns for the quarter were fund 1.12%, and benchmark 1.25%.
The move in interest rates was the main driver of absolute and relative returns over the month and quarter. The longer duration position delivered mixed results as shorter maturity bonds performed better than longer maturities as the yield curve steepened. Credit holdings helped with a higher yield accrual. Credit margins have widened slightly (from previously tight levels) with more bond supply, but a gradual widening should benefit returns through a higher yield over the medium term. The fund participated in several new bond issues over the quarter, we like 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. 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.