OneAnswer KiwiSaver Scheme New Zealand 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

1.30%

4.12%

4.25%

5.14%

5.28%

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)

  • New Zealand bonds took their lead from overseas bonds, which rallied on the back of a ‘flight to quality’ into safe-haven assets given the backdrop of equity market volatility. Some weak domestic economic data also suggests that New Zealand interest rates may need to stay lower for longer – a positive for bond investors.
  • Against this backdrop, 10-year government bond yields finished the quarter 24 basis points lower, at 2.37%. This meant positive gains from the market in total return terms.
  • The fund’s exposure to corporate bonds was also of benefit. It’s holdings in high-quality bonds, as well as the higher yields available from the sector as a whole, helped to deliver positive returns for investors.
  • However, detracting from returns was our cautious view on bonds, given our belief that the world’s central banks will, at some point, move interest rates higher. This held back performance, as the local bond market rallied in line with overseas markets.
  • While the prospect of higher global interest rates may affect future returns from this asset class, it’s important to remember that bonds play an important role in a diversified portfolio – helping to provide it with a solid foundation.

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 New Zealand fixed interest assets. Investments may include:

  • fixed interest assets issued by New Zealand or international entities denominated in New Zealand dollars, and
  • cash and cash equivalents.

This chart show 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.