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Forsyth Barr NZ Fixed Interest Fund

The fund aims to achieve positive long-term returns by investing in selected New Zealand dollar denominated fixed interest assets, subject to the risks associated with investments in fixed interest markets.

Unit Price

AS AT 3 Aug 2020

1.9289 NZD


Month End Unit Price

As at 30 Jun 2020

1.9215 NZD

Manager's Comment

Market Commentary

The June quarter was a simpler affair for fixed interest investors when compared to the previous quarter.

Indeed, returns for the Forsyth Barr NZ Fixed Interest Fund were positive for the June quarter as compared to March’s negative quarterly returns.

Interestingly enough, the fund’s key investment themes where unchanged over the last six months -

  • an overinvestment in long-dated New Zealand Local Government Funding Agency bonds (NZLGFA)
  • exposures to senior / unsubordinated fixed interest securities listed on the NZX debt market.

Synchronised and aggressive international monetary and fiscal policies have driven the yields on global government bonds lower, igniting investor desire to purchase higher yielding non-government bonds - benefitting the fund’s investments in NZLGAF bonds (which we consider to be a New Zealand Government bond proxy) and fixed interest securities listed on the NZX.

Portfolio Positioning

We intend to continue to hold the securities currently in the fund, on the basis of our analysis that these securities will continue to pay scheduled interest coupons and principal at maturity. Simply put, we are confident in the on-going government and government agency responses and the actions of the boards and senior management of the companies we have invested in. While it will not be business as usual as New Zealand enters a sharp and deep recession over the remainder of this year, we continue to see the need for a portfolio of preferred securities that pay regular income.   

Furthermore, we see the Reserve Bank of New Zealand’s May Monetary Policy Statement as the official licence to maintain the twin thrust of local monetary policy: an Official Cash Rate of 0.25% and Quantitative Easing, via the Large Scale Asset Purchase programme.

To us, the RBNZ has made clear its intentions to lower interest rates across the local economy and to keep them low for an extended period of time.

Outlook

Our elected and appointed officials have done a remarkable job in their initial response to COVID-19.

Over the June quarter the RBNZ actively continued with its mandate to keep our financial system functioning – we back the biggest and most successful investor in town to get the job done!

Major Investments

As at 30 Jun 2020

Company name Volume
ANZ transactional bank account 10.87%
New Zealand Local Government Funding Agency Ltd 14/04/2033 3.50% 7.79%
New Zealand Local Government Funding Agency Ltd 15/04/2025 2.75% 5.92%
Housing New Zealand 3.42% 18/10/2028 5.51%
Bank of New Zealand Subordinated Note 17/12/2025 5.314% 3.39%
New Zealand Local Government Funding Agency Ltd 15/04/2027 4.50% 3.00%
New Zealand Local Government Funding Agency Ltd 14/04/2022 2.75% 2.82%
Meridian Energy Limited 27/06/2025 4.21% 2.64%
Housing New Zealand 3.36% 12/06/2025 2.15%
Genesis Energy Limited 5.0% 03/04/2025 2.09%
Major holdings as % of total portfolio 46.18%
Total portfolio holdings 65

Return Comparison

As at 30 Jun 2020

1 Month 3 Months 1 Year 3 Years* Since commenced operation*
*Annualised
Net Fund Return 1 Month 0.23% 3 Months 3.22% 1 Year 3.63% 3 Years* 3.65% Since commenced operation* 3.99%
Gross Fund Return 1 Month 0.39% 3 Months 4.71% 1 Year 5.93% 3 Years* 5.95% Since commenced operation* 6.48%
S&P/NZX Investment Grade Corporate Bond Index 1 Month 0.20% 3 Months 3.47% 1 Year 5.84% 3 Years* 5.78% Since commenced operation* 6.57%

The unit prices shown do not take into account any adjustment for PIE tax.

Net Fund Returns are calculated after deduction of fund charges, trading expenses and accrued tax for a New Zealand resident paying individual tax at the highest Prescribed Investor Rate (28%). Gross Fund Returns are calculated before deduction of taxes and fund charges but after deduction of trading expenses. Market index returns do not have any deductions for fund charges, trading expenses or tax.

The S&P/NZX Investment Grade Corporate Bond Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Forsyth Barr Limited. Copyright © 2015 S&P Dow Jones Indices LLC, a subsidiary of McGraw Hill Financial Inc., and/or its affiliates. All rights reserved. Redistribution, reproduction and/or photocopying in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

Morningstar Performance

Morningstar, are a leading global provider of independent investment research that rank and report on Funds within New Zealand and Australia. View the latest Fund Report for the NZ Fixed Interest Fund here.

Fund update

As at 30 June 2020

This document tells you how the Forsyth Barr New Zealand Fixed Interest Fund has performed and what fees were charged. The document will help you to compare the fund with other funds.

General Fund Information

Risk indicator

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LOWER RISK
HIGHER RISK

The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the relevant fund’s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way. The risk indicator is based on the returns data for the five years to 30 June 2020. See more information about the risks of investing in the Product Disclosure Statement.

Target investment mix

Price Volume
Cash and cash equivalents 5.00%
New Zealand fixed interest 90.00%
International fixed interest 5.00%
Australasian equities 0.00%
International equities 0.00%
Listed property 0.00%

Things to note

  • Manager: Forsyth Barr Investment Management Limited
  • Date the fund started: 26 June 2008
  • Tax status: Portfolio Investment Fund (PIE)
  • Minimum suggested investment time frame: At least three years
  • Benchmark: None
  • Currency: New Zealand dollars
  • View the Product Disclosure Statement for detailed information about this Fund and Forsyth Barr Investment Funds Scheme.

Fees

Annual fund charges are currently 0.80% of the net asset value of the fund (estimated), made up of our management fee (0.75%) and other annual fund charges (0.05%, estimated).

All fees and charges are quoted exclusive of GST.

Forsyth Barr Investment Management is the manager of the Investment Funds. The comments on this webpage do not take your personal circumstances into account. Before acting on this information, please contact your Forsyth Barr Authorised Financial Adviser. His or her disclosure statement is available on request and free of charge. Forsyth Barr Limited and its affiliates do not make any representation or warranty (express or implied) that this webpage 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 webpage. This webpage is not intended to be distributed or made available to any person in any jurisdiction where doing so would constitute a breach of any applicable laws or regulations.

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser.

Get in touch

22 locations around New Zealand

To find out more about our NZ Fixed Interest Fund, speak to one of our Investment Advisers. They will help you determine the role an Investment Fund can play in helping you achieve your goals.