Summer New Zealand Fixed Interest

Summer New Zealand Fixed Interest fund performance summary as at 30 June 2021.

Fund at a glance

Unit price (as at 30 June 2021): $1.1569

Date the fund started: 19 September 2016

For information on fees, see our Fees page.

For more information on the Summer New Zealand Fixed Interest fund read the latest quarterly fund update and the product disclosure statement

Fund objective and strategy

See the New Zealand Fixed Interest 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% 2.24% 0.15% 0.13% -0.56% 2.36%
17.50% 2.57% 0.17% 0.15% -0.65% 2.70%
10.50% 2.78% 0.19% 0.16% -0.70% 2.93%

  ^ 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
ANZ transactional bank account 6.17%
Housing New Zealand 3.36% 12/06/2025 6.10%
New Zealand Local Government Funding Agency Ltd 14/04/2033 3.50% 5.94%
New Zealand Local Government Funding Agency Ltd 15/04/2027 4.50% 4.21%
Westpac New Zealand 1.439% 24/02/2026 3.88%
Housing New Zealand 2.97% 12/06/2023 3.82%
New Zealand Local Government Funding Agency Ltd 15/04/2025 2.75% 3.12%
New Zealand Local Government Funding Agency Ltd 15/04/2024 2.25% 3.09%
New Zealand Local Government Funding Agency Ltd 15/04/2022 2.75% 2.84%
Housing New Zealand 3.42% 18/10/2028 2.56%

The top 10 investments make up 41.37% of the fund.

Manager's Commentary

Market Commentary

The June quarter was an indifferent period for New Zealand fixed interest investors.

The June quarter returns for Summer New Zealand Fixed Interest were 0.13%.

Portfolio Positioning

Over the reporting period, we took the opportunity to further reduce cash holdings and also reinvest proceeds of maturing bonds by purchasing longer-dated securities.

This strategy wasn’t so much to increase duration (portfolio interest rate sensitivity) but to seek out securities that offered a compelling yield in excess of the Reserve Bank of New Zealand’s 2% inflation objective, a potential initial target for the Official Cash Rate (OCR), in our opinion.

While we are adamant that domestic bond yields will generally rise over the remainder of the year, our strategy of investing in longer-dated bonds did result in portfolio duration approaching four years – the longest we have been this year. We are comfortable to hold on the basis of our theory that an aggressive but very short-term counter trend move lower in bond yields is likely over the early stages of July.

In our view, the market has simply over- estimated the speed at which that the Reserve Bank of New Zealand will raise the OCR and dismantle its Large Scale Asset Purchase programme and as a consequence will need to re-adjust positioning accordingly.


There is no change to our current thesis: we expect domestic interest rates to rise in response to a persistent and sustained bout of inflation.

We’re slightly flummoxed as to why other commentators have not assessed domestic inflation as likely to evolve beyond cost-push to demand-pull inflation.

We acknowledge the current disruptions to the supply channel pushing up prices, which act as a tax if the discretionary portion of consumer income is not increased to compensate.

However, we see increased wages and salaries as a given, judging by recent employment growth and job advertisement numbers.

Add this to the positive wealth effect of the current level of residential property prices and favourable asset price returns over the last year; we forecast an emboldened consumer.  

Our assessment is for inflation to become the real deal: demand pull.

Finally, we believe the Reserve Bank of New Zealand will have no option but tighten both orthodox and unorthodox monetary policy settings – the consequence we see as higher interest rates and a flatter yield curve, as the yields of shorter-dated bonds chase the OCR higher more quickly than those of longer-dated bonds.



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.