Summer New Zealand Fixed Interest
Summer New Zealand Fixed Interest fund performance summary as at 30 November 2024.
Fund at a glance
Unit price (as at 30 November 2024): $1.1983
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% | 1.62% | 0.40% | 0.52% | 5.59% | 1.64% |
| 17.50% | 1.85% | 0.45% | 0.59% | 6.41% | 1.87% |
| 10.50% | 2.01% | 0.49% | 0.63% | 6.96% | 2.03% |
^ 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 53.85% of the fund.
Manager's Commentary
What happened in the markets that you invest in?
November was a positive month, in general, for New Zealand fixed interest investors. As expected, the Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 0.50% at its November meeting signalling in its post monetary policy statement press conference that another 50% cut would likely be appropriate in February.
General market consensus is that domestic inflation peaked some time ago and its flight path and ultimate destination are lower, back to well within the regulator’s target band of 1% - 3%. Encouragingly, September’s annual inflation number of 2.20% was further evidence that New Zealand’s inflation is now well contained, and commentator expectations are that December’s inflation release will be a similar number.
Notwithstanding uplifts in consumer and business sentiment surveys, local economic data continues to be poor and until we see actual economic activity data confirm the positive perception (or otherwise), we believe all financial markets will continue to be volatile.
How did your portfolio perform?
The New Zealand Fixed Interest Fund delivered a return net of fees and before tax of 0.55% for the month of November, and for the 12 months to the end of November, the New Zealand Fixed Interest Fund delivered a return net of fees and before tax of 7.78%.
What are we thinking about the future?
The fund’s duration, a measure of how sensitive the portfolio is to a given change in New Zealand wholesale interest rates, was around 4.90 years at the end of November and our intention is to increase it to around 5.0 years – opportunistically as and if term interest rates and bond yields move higher.
The fund’s gross yield to maturity, calculated as the weighted-average gross yield of all securities in the portfolio, was around 4.40% 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. 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 spreads 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 well in excess of the Fund’s yield-to-maturity, albeit at a slower rate of return than over the previous few months.
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.
