For a printable version of this performance information, please click here.
Summer New Zealand Fixed Interest fund performance summary as at 31 December 2017.
Unit price (as at 31 December 2017): $1.0342
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|
|1||ANZ Cash Deposit||11.96%|
|2||New Zealand Local Government Funding Agency Ltd 15/04/2023 5.50%||5.12%|
|3||New Zealand Local Government Funding Agency Ltd 15/05/2021 6.00%||4.72%|
|4||New Zealand Local Government Funding Agency Ltd 15/04/2020 3.00%||4.52%|
|5||Transpower New Zealand Ltd 30/06/2022 4.30%||4.48%|
|6||New Zealand Local Government Funding Agency Ltd 15/03/2019 5.00%||4.44%|
|7||Bank of New Zealand Subordinated Note 17/12/2025 5.314%||3.59%|
|8||ANZ Bank New Zealand Limited Perpetual 18/04/2018 5.28%||3.19%|
|9||ANZ Bank New Zealand Ltd 25/09/2020 4.03%||3.17%|
|10||Sky City Entertainment Group Ltd 28/09/2022 4.65%||2.75%|
The top 10 investments make up 47.94% of the fund.
Summer New Zealand Fixed Interest delivered returns of 0.17% for the month, 0.87% for the three months to December and 3.82% for the year.
Over the December quarter market participants considered the likely economic direction of the new coalition government. Initial impressions were not favourable with a number consumer and business sentiment surveys* pointing to gloomier times ahead.
Uncertainty around changes to the Reserve Bank of New Zealand’s conduct – discussion focussed on the potential to amend the Price Targets Agreement between the Minister of Finance and the Governor of the Reserve Bank to include an employment objective – and the appointment of a new governor, also added to the general level of market angst.
Overseas, where political ructions are business-as- usual, market players celebrated the passing of new American tax legislation and the expected commensurate uplift in economic activity by pushing up US interest rates, back towards cycle highs.
For some time we have expected domestic interest rates and bond yields to move higher and unsurprisingly we have positioned the portfolio for this outcome.
Investments are concentrated within the short to medium time horizon and we calculate the fund’s duration (the change in the portfolio’s value as interest rates move up or down) as around 2.80 years, less than the fund’s comparative benchmark and substantially less than the fund’s cohort group, which we estimate to have an average duration of around 4 years.
Furthermore, the fund is exposed to a larger than normal amount of shorter-term securities, currently invested in what we believe to be high quality assets issued by non-government entities or corporates, that are paying a return well in excess of the Official Cash Rate (currently 1.75%).
Notwithstanding the current decline in consumer and business sentiment post the formation of our new government, we forecast a rebound in economic confidence and predict an uplift in our economic performance once into the new year. We also assess the coalition government’s fiscal intentions to be more stimulatory than the former administration and that economic conditions globally will continue to improve; a tailwind which will benefit New Zealand.
On this basis we see authorities around the world, and ultimately here as well, withdrawing monetary stimulus and normalising (increasing) the level of official cash rates in order to head off the potential of inflation shocks.
We envisage a market response of higher interest rates and bond yields across the globe, which we have actively positioned for.
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.