Summer New Zealand Fixed Interest
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 risk indicator is based on the returns data for the five years to 30 June 2026.
* 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.
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% |
Minimum suggested investment timeframe
Fund at a glance
Unit price (as at 31 May 2026): $1.2755
Date the fund started: 19 September 2016
Fund returns
| PIR | 1 Month | 3 Month | 1 Year | 3 Years^ | Total since inception^ |
|---|---|---|---|---|---|
| 28% | 0.84% | -0.14% | 3.20% | 3.78% | 1.84% |
^ 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 | 8.84% |
| 2 | New Zealand Government 14/04/2033 3.5% | 6.77% |
| 3 | New Zealand Government 15/05/2032 2.00% | 4.91% |
| 4 | NZ Government 4.25% 15/05/2034 Green Bond | 4.68% |
| 5 | New Zealand Government 4.5% 15/05/2035 | 4.67% |
| 6 | New Zealand Government 4.25% 15/05/2036 | 4.34% |
| 7 | ANZ Bank New Zealand Limited 17/09/2031 2.99% | 4.30% |
| 8 | New Zealand Government 4.50% 15/05/2030 | 3.94% |
| 9 | New Zealand Government 3% 20/04/2029 | 3.88% |
| 10 | New Zealand Government 15/05/2028 0.25% | 3.38% |
| Top 10 investments total | 49.71% | |
Portfolio Holdings
Summer New Zealand Fixed Interest Portfolio Holdings
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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 1.17% for the month of May. For the 12 months to the end of May, the fund delivered a return after fees and before tax of 4.47%.
What happened in the markets that you invest in?
The fund’s positive returns in May were encouraging given the recent volatility seen over the previous few months.
Indeed, the Reserve Bank of New Zealand’s April Monetary Policy Statement was nicely balanced, in our view, acknowledging the tension between materially higher inflation forecasts and falling expectations for domestic economic activity.
Unsurprisingly, the response to a well-moderated and well-constructed policy statement was a relief rally, a move lower in bond yields and term interest rates, delivering significant capital gains to investors for the month of May.
What are we thinking about the future?
The current consensus around some sort of resolution to the Middle East should be constructive for term interest rates and bond yields over the medium term.
An immediate spike higher in both global and domestic inflation is widely anticipated with most market participants seeing the consumers’ price index (CPI) over 4.0% later in the year, well above the Reserve Bank of New Zealand's (RBNZ) 2% inflation target.
Accordingly, we think that market forecasts for the Official Cash Rate (OCR) look about right; a series of sequential hikes taking the OCR up to between 3.50% and 3.75%, by the end of next year.
Understandably, the RBNZ is cautious around increasing its Official Cash Rate (OCR) to manage the inflationary effects of a (fuel) supply shock. Supply shocks - without a commensurate increase in wages or salaries - act as consumption tax, damping economic activity. Mechanically pushing up interest rates at the same time has the potential to deliver a double-whammy to household expenditure.
We’re pretty pessimistic, to be honest.
Indeed, we actively follow the Reserve Bank of New Zealand’s Kiwi-GDP predictions, which estimate June quarter GDP growth to be close to zero. With New Zealand labour productivity generally subdued, we doubt that local wage and salary earners will receive remuneration increases to offset the impact of fuel price inflation.
Moreover, with the annual movement in residential property prices basically flat, we believe we’ll see increasing rhetoric around the negative wealth effect associated with household asset price performance.
Ultimately, we see declining real incomes and weakening consumer balance sheets curtailing discretionary retail consumption.
The fund’s gross yield to maturity, calculated as the weighted-average gross yield of all securities in the portfolio, was around 4.30%.
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 4.95 years, exceeding the benchmark duration of 4.71 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.