Summer New Zealand Fixed Interest fund performance summary as at 30 September 2018.
Unit price (as at 30 September 2018): $1.0621
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
See the New Zealand Fixed Interest page for the Summary of investment objective and strategy.
|Annualised total since inception||1 Month||3 Months||1 Year|
Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the highest Prescribed Investor Rate (28%).
|Asset name||% of fund net assets|
|1||ANZ Cash Deposit||9.37%|
|2||New Zealand Local Government Funding Agency Ltd 15/04/2025 2.75%||7.04%|
|3||Housing New Zealand 3.36% 12/06/2025||4.00%|
|4||New Zealand Local Government Funding Agency Ltd 15/04/2023 5.50%||3.65%|
|5||New Zealand Local Government Funding Agency Ltd 15/05/2021 6.00%||3.43%|
|6||Transpower New Zealand Ltd 30/06/2022 4.30%||3.31%|
|7||New Zealand Local Government Funding Agency Ltd 15/04/2020 3.00%||3.26%|
|8||Bank of New Zealand Subordinated Note 17/12/2025 5.314%||2.61%|
|9||Genesis Energy Limited 5.0% 03/04/2025||2.47%|
|10||Christchurch International Airport Limited 24/05/2024 4.13%||2.28%|
The top 10 investments make up 41.42% of the fund.
Over the September quarter market participants carried over their indecision from the previous quarter, failing to hammer out a broad market consensus for the direction of asset prices.
Indeed, while the rout in emerging markets’ currencies and equities markets continued with gusto early in the quarter, it was only fatigue in our opinion, rather than a perception of a lasting resolution, that resulted in the recovery of many emerging markets asset prices at quarter-end close.
The verdict is still also out for developed economies. While improving economic and business performance pushed US and Japanese bourses to historical or longer-cycle highs, the Italian stock market’s close to 5% fall over the last week of September succinctly reflected the likely fiscal arm- wrestle between the populist Italian government and those responsible for enforcing European budget rules.
Uncertainty, in our view, will be the theme for the remainder of the year. Like a long-term sufferer of chronic back pain with unannounced periods of acute discomfort, we see asset prices, in general, as becoming more volatile with a commensurate waxing and waning in investor angst.
Friction arising with the trade war rhetoric is now well considered by the market. However, the spasm associated with the budget proposed by the populist Italian government, in our view, is not. Not surprisingly, the Italian government 10 year bond yield has hit levels not seen since 2014, as investors suffer flashbacks to the Greek government debt crisis of a few years ago.
Closer to home the Reserve Bank of New Zealand (RBNZ) continue to reiterate their message of no change to the Official Cash Rate (OCR). In our view, the RBNZ are doing their job very well, as they manage monetary policy in response to forward looking indicators such as business and household sentiment surveys; we agree with the RBNZ, the OCR is likely on hold for the next couple of years.
Our assessment of international events and our interpretation of the potential trajectory for the local economy – down – have resulted in us increasing portfolio duration (interest rate sensitivity) beyond 3 years. We have done this by primarily increasing exposure to longer- dated bonds, those with maturities beyond 2024.
With domestic money policy on hold, in our opinion, for the foreseeable future and levels of investor angst rising, we will continue to increase duration as opportunities arise by adding further high quality assets.
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.