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Summer New Zealand Fixed Interest fund performance summary as at 31 March 2018.
Unit price (as at 31 March 2018): $1.0409
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
Further information can be found in the product disclosure statement.
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|
|ANZ Cash Deposit||7.97%|
|New Zealand Local Government Funding Agency Ltd 15/04/2023 5.50%||4.76%|
|New Zealand Local Government Funding Agency Ltd 15/05/2021 6.00%||4.37%|
|New Zealand Local Government Funding Agency Ltd 15/04/2020 3.00%||4.19%|
|Transpower New Zealand Ltd 30/06/2022 4.30%||4.16%|
|New Zealand Local Government Funding Agency Ltd 15/04/2025 2.75%||4.00%|
|Westpac New Zealand Ltd Fixed Rate Notes 20/09/2018 5.545%||3.51%|
|Bank of New Zealand Subordinated Note 17/12/2025 5.314%||3.28%|
|ANZ Bank New Zealand Limited Perpetual 18/04/2018 5.28%||2.96%|
|ANZ Bank New Zealand Ltd 25/09/2020 4.03%||2.88%|
The top 10 investments make up 42.08% of the fund.
Summer New Zealand Fixed Interest delivered returns of 0.19% for the month, 0.47% for the three months to March and 3.20% for the year.
Over the March quarter market participants considered the new initiatives enacted by US legislators.
Taken together American tax reforms and a permitted increase in future US government spending were seen as further tailwinds to an economy operating at near to full capacity, in our view. Not surprisingly US interest rates, in general, moved up towards cycle highs over the March quarter
Furthermore, we continue to look for and expect future inflation to persist, validating the US Federal Reserve’s action in normalising its monetary policy settings by sequentially increasing official interest rates.
Back on the home front we see things slightly differently. We’re cautious around business confidence, where we expect larger than (recent) historical demands for wages and salary increases to negatively impact on corporate profitability and sentiment.
In addition, New Zealand inflation expectations look to be well anchored in our assessment and with a slight tweaking of the Policy Targets Agreement (contract between the Governor of the Reserve Bank of New Zealand and the Minister of Finance) to consider employment aspirations when implementing monetary policy, we see a mild softening in the regulator’s attitude to managing inflation.
With our reassessment of domestic inflation outcomes, we have taken the opportunity to increase portfolio duration (interest rate sensitivity) towards three years. We have also added some exposure to longer- dated bond investments, increasing the fund’s exposure to the five and seven-year tenor.
We fully acknowledge the bouts of asset price volatility over the first quarter of the year and are likely to continue adding new investments that we view as high quality. For example, over the quarter we added exposures to Transpower and New Zealand Local Government Funding Agency bonds and when available, we intend to gain exposure to debt securities issued by Housing New Zealand.
With domestic monetary policy on hold, in our opinion, for at least the remainder of this year and levels of investor angst rising, we will continue to increase portfolio duration as opportunities arise.
We calculate the portfolio’s weighted-average credit quality to be “A-“and the yield-to-maturity at around 3.40%*.
For more information on the Summer New Zealand Fixed Interest fund, read the latest quarterly fund update.
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.