Summer New Zealand Cash

Summer New Zealand Cash fund performance summary as at 31 December 2021.

Fund at a glance

Unit price (as at 31 December 2021): $1.0485

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% 0.65% 0.03% 0.06% 0.01% 0.40%
17.50% 0.74% 0.03% 0.07% 0.01% 0.46%
10.50% 0.81% 0.03% 0.08% 0.01% 0.50%

 ^ 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 Spark Finance Limited RCD 17/02/2022     23.10%
2 ANZ transactional bank account 17.56%
3 Genesis Energy Ltd Bonds 18/03/2022 4.14% 15.75%
4 GMT Bond Issuer Limited 23/06/2022 5.00% 14.70%
5 Fonterra Co-op Group RCD 21/01/22        14.45%
6 Port of Tauranga Limited Commercial Paper 16/02/2022      14.44%
7    
8    
9    
10    
  Total value of top 10 assets 100.00%

Manager's Commentary

Market Commentary

The Official Cash Rate (OCR) was maintained at 0.75% over December.

Both the market and the regulator are in broad agreement that monetary conditions will need to tighten further over the next few years.

Summer New Zealand Cash delivered a return of 0.03% (28% PIR) for December.

Portfolio Positioning

The fund continued with its strategy of holding a variety of what we believe to be quality investments, spread across shorted-dated fixed interest securities, commercial paper and an on-call bank deposit, in order to boost fund returns beyond the OCR.

Outlook

We are sticking to our view that the OCR will move up to what we consider to be just above the neutral cash rate, at around 2.50%.  The basis of our thinking is that we now doubt that the widely anticipated wage and salary increases will match price hikes associated with current supply disruptions, exacerbated by increased consumer demand.

A decline in real purchasing power acts as a tax on income, a theme which we expect to gain more “air time” as we move into the beginning of the New Year, if our pick for faltering consumer confidence and falling household discretionary spending is correct.

We are also questioning the market’s view of six times 0.25% OCR hikes over this year alone1,this pace seems too hot for our thinking and we reference other developed economies, where predictions1 are for a more cautious and benign approach to tightening monetary policy. 

Over this next year, term deposit rates are likely to rise as the OCR increases, but given our expectation for a slower pace of OCR hikes, in relation to market pricing, we expect cash investments to continue to offer meagre income, albeit a rate of return slightly higher than now.

1 Westpac Institutional Bank, “What’s Priced In?”, 22 December 2021

 

 

 

 

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.