Summer New Zealand Cash
Summer New Zealand Cash fund performance summary as at 30 June 2024.
Fund at a glance
Unit price (as at 30 June 2024): $1.1545
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
For more information on the Summer New Zealand Cash fund read the latest quarterly fund update and the product disclosure statement.
Fund objective and strategy
See the New Zealand Cash page for the Summary of investment objective and strategy.
Fund returns
| PIR | Total since inception (annualised) | 1 Month | 3 Month | 1 Year | 3 Years^ |
| 28% | 1.34% | 0.29% | 0.94% | 4.02% | 2.36% |
| 17.50% | 1.54% | 0.34% | 1.08% | 4.62% | 2.70% |
| 10.50% | 1.67% | 0.37% | 1.17% | 5.02% | 2.94% |
^ 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
The top 10 investments make up 51.35% of the fund.
Manager's Commentary
What happened in the markets you invest in?
Interest rates finished the month lower than where they started, both domestically and overseas. The New Zealand dollar two-year swap rate fell -0.14% over the month, while the US two-year treasury rate fell -0.17%. Data released in New Zealand reinforced that the economy remains very weak. Stats NZ Retail Card Transactions, along with the BNZ / Business NZ PMI and PSI indices for May all suggested a contracting economic environment in New Zealand.
The latest New Zealand Gross Domestic Product (GDP) print indicated that the economy grew by just 0.2% to March 2024, which was in-line with what major economists and the Reserve Bank of New Zealand (RBNZ) expected. All else equal, this could signal that the RBNZ is able to cut the Official Cash Rate (OCR) earlier than they have previously signalled - perhaps explaining the modest reduction in NZ interest rates over the month.
Cash and cash equivalent investments continue to benefit from the decade-high levels of short-term interest rates.
How did your portfolio perform?
Summer New Zealand Cash delivered a return net of fees and before tax of 0.41% in June. For the 12 months to the end of June the fund delivered a return net of fees and before tax of 5.63%.
Over the year the fund has benefited from both its duration and credit positioning. The fund's duration has fluctuated between 0.2 and 0.5 years as we have assessed the changing outlook for interest rates. Over the last 12 months interest rates have moved somewhat lower which has provided modest capital gains to the fund.
Additionally, the fund's credit positions, in both commercial paper and short-dated bonds, have allowed it to capture a higher yield than the fund's market index. For example, a recent addition to the portfolio has been a small position in Channel Infrastructure's 2027 senior bond (CHI020) which the fund purchased at a credit margin of around 180bps. Channel Infrastructure owns and operates critical New Zealand fuel infrastructure and has stable and visible revenue thanks to long-term contracts with its customers making it a company we are comfortable to have exposure to.
What are you thinking about the future?
We expect the RBNZ to hold the OCR steady at 5.50% for some time. The market (as measured via the Overnight Index Swap market) expects that the first OCR cut will occur in November this year or February next year.
At the end of June the fund had a portfolio duration, calculated as the weighted average modified duration of all securities in the fund, of 0.5 years. The portfolio had a yield to maturity of approximately 6.0%, being the weighted average gross yield to maturity of the securities in the fund.
We are currently focused on maintaining duration at this level and are taking advantage of opportunities in short-dated corporate bonds, like the opportunity in Channel Infrastructure's 2027 senior bond (CHI020) outlined above.
This is not a recommendation to buy or sell any financial product and does not take your personal circumstances into account. All opinions reflect our judgement on the date of communication and may change without notice. Past performance is not a reliable guide to future performance. We recommend you take financial advice before making investment decisions. We have prepared this web page in good faith based on information obtained from other sources, but we do not guarantee the accuracy of that information. We do not make any representation or warranty (express or implied) that this web page is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this web page.
