Summer New Zealand Cash
Summer New Zealand Cash fund performance summary as at 31 August 2024.
Fund at a glance
Unit price (as at 31 August 2024): $1.1678
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% | 1.42% | 0.35% | 1.12% | 4.16% | 2.64% |
| 17.50% | 1.63% | 0.41% | 1.29% | 4.78% | 3.03% |
| 10.50% | 1.77% | 0.44% | 1.40% | 5.20% | 3.29% |
^ 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 52.53% of the fund.
Manager's Commentary
What happened in the markets you invest in?
August was another positive month, in general, for domestic income investors.
An unsurprising result given the Reserve Bank of New Zealand’s dramatic announcement in its August Monetary Policy Statement that the long- awaited easing of monetary policy had officially begun: the Official Cash Rate (OCR) was cut by 0.25% to 5.25%.
Emboldened participants pushed short-dated bond yields significantly lower monetising the fund's duration as capital gains, contributing to the month’s returns.
The fund’s diversified investment strategy of investing in commercial paper (displayed as RCDs under Major Investments) and short-dated bonds meant the fund’s returns were a tidy combination of interest rate returns and capital gains.
How did your portfolio perform?
Summer New Zealand Cash delivered a return after fees and before tax of 0.49% for the month of August.
For the 12 months to the end of August Summer New Zealand Cash delivered a return after fees and before tax of 5.83%.
What are you thinking about the future?
General market consensus is that domestic inflation peaked some time ago and its flight path and ultimate destination are lower, back to well within the regulator’s target band of 1% - 3%.
Indeed, while domestic inflation-linked bonds have been a poor indicator of inflation outcomes, in our view, we note that the New Zealand Government 2035 inflation-linked bond implies a longer-term inflation rate approaching 1.80%.
Last month, with over 2% of OCR cuts expected by the market come July next year, we thought that New Zealand bond yields and term interest rates may have fallen too far, too fast. Now, we’re not so sure.
Local economic data is poor and while forward looking “soft” data surveys point to improving economic sentiment, we think the actual reality could be different. Our concern is that consumer activity will continue to be weak until greater certainty returns to the employment market – and we’re betting that the employment market will deteriorate further in a combination of less job offers and lower remuneration. Here, our thinking aligns with the RBNZ in that we anticipate the unemployment rate to peak sometime towards the middle of next year at around 5.5%, significantly higher than last June’s 4.60%.
At the end of August the fund had a portfolio duration, calculated as the weighted average modified duration of all securities in the fund, of around 0.3 years. The portfolio had a gross yield to maturity of approximately 5.60%, being the weighted average gross yield to maturity of the securities in the fund.
Our current focus is to rebuild the fund’s gross yield-to-maturity and opportunistically increase portfolio duration: all business as usual for an active manager.
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.
