OneAnswer KiwiSaver Scheme International Fixed Interest Fund

Fund report as at 31 December 2018
 

How has the fund performed?

Performance as at 31 December 2018

3 months

1 year

3 years (pa)

5 years (pa)

Since launch

2.17%

1.90%

2.68%

4.28%

5.53%

Performance is after the annual fund charge, and before tax and membership fees (if applicable). For more information, see legal information and disclaimers.

What happened this quarter (3 months to 31 December 2018)

  • Against the backdrop of share market volatility and only moderate inflation, most major global bond markets gained ground over the quarter in total return terms. Bonds tend to benefit from being a ‘safe haven’ in times of volatility.
  • In the US, the Federal Reserve raised interest rates once more, and indicated they had moved close to a more ‘neutral’ level. This gave bond markets a boost, as it suggested that interest rates in the US may not need to rise by as much as some investors had feared.
  • UK and European bonds were also good performers, as ongoing Brexit uncertainties and falling local share markets meant safe-haven bonds were in favour. Italian bond yields initially jumped as the EU rejected the country’s expansionary budget, but later fell as it appeared they’d reached a compromise. Meanwhile, in France, bonds underperformed towards year-end, as President Macron promised a tax-break package for the country’s citizens.
  • The fund’s GDP-weighted approach to investing provided a positive contribution to performance, as the fund had a higher weighting to the better-performing US bond market. It also resulted in it having a lower weighting to both Italian and French bonds.
  • While the prospect of further interest rate increases will likely impact on the future returns from this asset class, it’s important to remember that bonds play an important role in any diversified portfolio – helping to provide a solid foundation to a broader investment portfolio during times of uncertainty and market volatility.

Need more information?

  • Read our Market Review for more information on investment markets
  • Key read: why it’s wise not to try to time the market or chase returns

What does the fund invest in?

The fund invests mainly in international fixed interest assets. Investments may include:

  • fixed interest assets issued by governments or international companies, and
  • cash and cash equivalents.

This chart shows the mix of assets that the fund generally intends to invest in.

See the fund's actual investment mix on page 3 of the Fund update.