Summer New Zealand Fixed Interest
Summer New Zealand Fixed Interest fund performance summary as at 31 January 2025.
Fund at a glance
Unit price (as at 31 January 2025): $1.2041
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% | 1.63% | -0.11% | 0.75% | 4.36% | 1.79% |
| 17.50% | 1.86% | -0.13% | 0.85% | 5.00% | 2.05% |
| 10.50% | 2.02% | -0.14% | 0.93% | 5.42% | 2.23% |
^ 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
The top 10 investments make up 46.70% of the fund.
Manager's Commentary
How did your portfolio perform?
Summer New Zealand Fixed Interest delivered an after fees and before tax return of -0.16% for the month of January and for the 12 months to the end of January, Summer New Zealand Fixed Interest delivered an after fees and before tax return of 6.06%.
What happened in the markets that you invest in?
January was generally a quiet month for New Zealand fixed interest investors. The twin themes of falling domestic inflation and faltering domestic economic performance continued. Against this backdrop, bond yields and term interest rates marked time and paused for breath ahead of the Reserve Bank of New Zealand’s (RBNZ) Official Cash Rate (OCR) announcement to come in February.
What are we thinking about the future?
Simply put, market participants expect the RBNZ to cut the OCR by 0.50% to 3.75% at the regulator’s next monetary policy announcement in February.
Our current thinking however is that it’s a too simplistic thesis that lower interest rates will mechanically result in a material lift in economic performance. We believe that economic uncertainty remains in many NZ households and that wary consumers will save (or reduce debt by keeping mortgage payments constant) rather than spend interest rate windfalls. On this basis, we intend to remain fully invested.
The fund’s duration, a measure of how sensitive the portfolio is to a given change in New Zealand wholesale interest rates, was around 4.60 years, broadly matching the fund’s market index at the end of January. Our intention continues to be increasing duration to around 5.0 years.
The fund’s gross yield to maturity, calculated as the weighted-average gross yield of all securities in the portfolio, was around 4.35% and the weighted-average portfolio credit quality was AA- (where a security does not have an external credit rating we have assigned an internal credit rating based on our assessment). We use the lowest available credit rating for New Zealand Government bonds, Fitch’s AA+.
Our investment strategy is to continue to accumulate New Zealand Government bonds while rationing capital to short-dated or preferred non-Government securities. In general, corporate bond spreads, roughly the difference in yield between a Government security and its non-Government equivalent, are simply too tight, in our view. At around long-term averages these do not appropriately reflect the risks of the current economic cycle, in our view.
We’re still preferring “hard duration” in the form of Government bonds and Government bond proxies to better protect against a deterioration in corporate credit spreads, and we expect the fund to continue to deliver capital gains to investors in excess of the fund’s yield-to-maturity.
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.
