Summer New Zealand Fixed Interest
Summary of investment objective and strategy
To achieve long-term returns (before fees, taxes and other expenses) greater than the Bloomberg NZBond Composite 0+ Yr Index.
These investments typically have low to moderate levels of movement up and down in value.
Strategic investment mix
| Category | % |
|---|---|
| Cash and cash equivalents | 5.00% |
| New Zealand fixed interest | 95.00% |
| International fixed interest | 0.00% |
| Total income assets | 100% |
| Australasian equities | 0.00% |
| Listed property | 0.00% |
| International equities | 0.00% |
| Total growth assets | 0% |
| Total portfolio | 100% |
Risk indicator
The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the fund’s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way.
* The composite benchmark for each multi-asset class fund is made up of the single asset class benchmarks weighted by the target asset allocation for the asset class.
Minimum suggested investment timeframe
At least three years
Fund at a glance
Unit price (as at 28 February 2026): $1.2779
Date the fund started: 18 October 2019
Fund returns
| PIR | Total since inception^ | 1 Month | 3 Month | 1 Year | 3 Years^ |
|---|---|---|---|---|---|
| 28% | 1.91% | 1.08% | 0.73% | 3.95% | 4.34% |
^ Annualised
Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the Prescribed Investor Rate identified above.
Top 10 investments
| # | Asset name | % of fund net assets |
|---|---|---|
| 1 | New Zealand Government 1.5% 15/05/2031 | 6.82% |
| 2 | New Zealand Government 14/04/2033 3.5% | 6.44% |
| 3 | New Zealand Government 15/05/2032 2.00% | 5.26% |
| 4 | NZ Government 4.25% 15/05/2034 Green Bond | 5.06% |
| 5 | New Zealand Government 4.5% 15/05/2035 | 5.05% |
| 6 | New Zealand Government 4.25% 15/05/2036 | 4.70% |
| 7 | New Zealand Government 4.50% 15/05/2030 | 4.26% |
| 8 | New Zealand Government 3% 20/04/2029 | 4.16% |
| 9 | ANZ Bank New Zealand Limited 17/09/2031 2.99% | 3.61% |
| 10 | New Zealand Government 15/05/2028 0.25% | 3.57% |
| Top 10 investments total | 48.93% | |
Manager's Commentary
How did your portfolio perform?
The New Zealand Fixed Interest Fund (the fund) delivered a return after fees and before tax of 1.51% for the month of February. For the 12 months to the end of February, the fund delivered a return after fees and before tax of 5.51%.
What happened in the markets that you invest in?
The month of February was a good month or fixed interest investors in the fund.
In its February Monetary Policy Statement (MPS), the Reserve Bank of New Zealand (RBNZ) took the opportunity to recalibrate market expectations as to how soon and how fast it was likely to increase the Official Cash Rate (OCR): its statement was more dovish than anticipated.
Acknowledging the RBNZ’s desire to look through current, sticky inflation in favour of allowing the economy more time to build on positive economic sentiment, market participants re-priced term interest rates and bond yields lower, delivering significant capital gains to investors in the fund.
What are we thinking about the future?
The war in the Middle East began on 28 February and we have no updated view on the likely outcome. Our broad thesis was that the risks of an oil price shock and associated inflation would be tempered by the potential negative impact on global economic growth.
We also predicted that the interpretation of discrete media updates, actions and rhetoric would determine the travel of bond yields and terms interest rates. Typically, this a tougher than normal trading environment and we expect portfolio performance to be commensurately more volatile over the shorter term.
The fund’s gross yield to maturity, calculated as the weighted-average gross yield of all securities in the portfolio, was 3.90%. The fund’s weighted-average credit quality was AA-. Where a security does not have an external credit rating, we assign an internal credit rating based on our assessment. We use the lowest available credit rating for New Zealand Government bonds, Fitch’s AA+.
The fund’s duration was 4.70 years, approximating the benchmark’s duration of 4.68 years. Our current target duration positioning range is +/- 0.5 years around the benchmark, which we will use if we assess interest rate moves as directionally and temporarily overstretched.
With around 70% of the portfolio invested in New Zealand Government bonds or proxies, the fund is well positioned to manage through any market dysfunction. Indeed, with uncertainty and volatility comes opportunities and ultimately, we anticipate returns to be attractive over the full year.
We will continue to target New Zealand Government inflation-linked bonds and other short-dated corporate bonds that provide yields well in excess of the current inflation rate of 3.10%.