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 31 January 2026): $1.2589
Date the fund started: 18 October 2019
Fund returns
| PIR | Total since inception^ | 1 Month | 3 Month | 1 Year | 3 Years^ |
|---|---|---|---|---|---|
| 28% | 1.80%% | -0.23%% | -0.95%% | 3.26%% | 3.63%% |
^ 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 | 6.95% |
| 2 | New Zealand Government 14/04/2033 3.5% | 6.54% |
| 3 | New Zealand Government 15/05/2032 2.00% | 5.35% |
| 4 | NZ Government 4.25% 15/05/2034 Green Bond | 5.13% |
| 5 | New Zealand Government 4.5% 15/05/2035 | 5.11% |
| 6 | New Zealand Government 4.25% 15/05/2036 | 4.75% |
| 7 | New Zealand Government 4.50% 15/05/2030 | 4.36% |
| 8 | New Zealand Government 3% 20/04/2029 | 4.27% |
| 9 | New Zealand Government 15/05/2028 0.25% | 3.67% |
| 10 | ANZ Bank New Zealand Limited 17/09/2031 2.99% | 3.56% |
| Top 10 investments total | 49.69% | |
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 –0.33%. for the month of January. For the 12 months to the end of January, the fund delivered a return after fees and before tax of 4.55%.
What happened in the markets that you invest in?
While the month of January is probably best summarised as unremarkable for fixed interest investors, the case is clearly building for a domestic economic recovery. Indeed, the Reserve Bank of New Zealand’s (RBNZ) GDPNow forecast ended the month predicting GDP December-quarter growth of 0.5% followed by March quarter growth of 0.75%.
While most New Zealanders and job-seekers will be pleased to see a healthy pick-up in expected economic activity, we caution that with annual inflation at ~3.0% – September’s inflation data was released mid-January – we’re likely to see the regulator bring forward its earlier signalling of the first Official Cash Rate (OCR) hike in late 2026.
What are we thinking about the future?
The broader market has moved its expectations for the first OCR hike well in advance of any updated messaging from the RBNZ, with consensus predicting a hike from 2.25% to 2.50% sometime towards the middle of this year.
The current tension between market participants and the RBNZ will be resolved – in a knee-jerk fashion and only for a very short time (we believe in a matter of days) in our view – when the next Monetary Policy Statement is published on 18 February.
We believe that for the first part of 2026 investor reaction to discrete economic data releases will drive the direction of term interest rates and bond yields. Typically, this a tougher than normal trading environment and we expect portfolio performance to be commensurately more volatile over the shorter term. With volatility comes opportunities and ultimately we anticipate returns to be attractive over the full year.
The fund’s gross yield to maturity, calculated as the weighted-average gross yield of all securities in the portfolio, was 4.15%. 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 at 4.80 years, slightly longer than the benchmark of 4.70 years. Our current 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. As mentioned in earlier commentaries, we see value in New Zealand Government inflation-linked bonds. These instruments, perpetually underpriced in our view, see even larger potential returns if inflation proves sticky at its current level of 3.00%.
Finally, in our view, the expected pick-up in economic activity should deliver a mechanical uplift in the performance of those businesses leveraged to the residential property market and discretionary consumer spending. We will continue to accumulate investments in securities like RYM010 and SKC050 bonds that are exposed to these twin themes.