Summer New Zealand Fixed Interest

Summer New Zealand Fixed Interest fund performance update as at 30 June 2017. 

Fund at a glance

Unit price (as at 30 June 2017): $1.0084

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

Fund objective and strategy

See the New Zealand Fixed Interest page for the Summary of investment objective and strategy.

Fund returns

 Total since inception1 Month3 Months6 Months
Fund 0.63% 0.01% 0.87% 1.94%

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%). 

Top 10 investments

  Asset name % of fund net assets
1 ANZ Cash Deposit 5.74%
2 New Zealand Local Government Funding Agency Ltd 15/04/2020 3.00% 4.83%
3 Transpower New Zealand Ltd 30/06/2022 4.30% 4.67%
4 Auckland Council 29/09/2017 6.52% 4.24%
5 New Zealand Local Government Funding Agency Ltd 15/12/2017 6.00% 3.88%
6 Bank of New Zealand Subordinated Note 17/12/2025 5.314% 3.69%
7 Westpac Cash Deposit 3.52%
8 ANZ Bank New Zealand Ltd 25/09/2020 4.03% 3.36%
9 New Zealand Local Government Funding Agency Ltd 15/04/2023 5.50% 3.27%
10 Sky City Entertainment Group Ltd 28/09/2022 4.65% 2.90%

The top 10 investments make up 40.10% of the fund.

Manager's comments

In the end, June was an uneventful month for investors in Summer New Zealand Fixed Interest, which delivered a return of 0.01% for the month.

However, we believe June will be pivotal in determining the direction of interest rates and bond yields for the remainder of the year.

In our view, politics will likely take a back seat and markets will instead be driven by the posturing and actions of central banks.

A controlled change in messaging came from a number of key central bank leaders over the month, with a consistency in rhetoric that indicated, to us at least, that the next evolution in monetary policy would be a reduction in the financial support that has been in place for many years now.

We also believe that  any reduction in official financial largesse will be glacial in speed and very well signaled – a strategy of no surprises and ’a long time between drinks‘, and not one that is necessarily synchronised across nations.

Indeed, we expect the Reserve Bank of New Zealand to maintain accommodative monetary policy and we see limited prospect of an increase in our Official Cash Rate over the course of this year.

Our interpretation of the regulator’s Financial Stability Report, May 2017, suggests prudential initiatives – minimum debt to income thresholds for home loan borrowers and increased bank capital requirements.  While designed to preserve financial stability, these initiatives will also have a positive impact on inflation outcomes. This is due to the fact that rationing the pool of credit available to the residential property market is one way of suppressing demand for housing stock and dissipating associated inflation.

We continue with our recent positioning, orientating exposures away from longer-dated bonds and into medium tenor securities; in addition we also hold exposures to a number of securities fast approaching maturity that offer compelling returns.

We believe the portfolio is well positioned for the second half of the year. 

 

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.