AMP Capital NZ Fixed Interest Fund

How the Fund works

The New Zealand Fixed Interest Fund is an actively managed portfolio of predominantly New Zealand fixed interest investments designed for those who wish to invest in a diversified portfolio of fixed interest securities/instruments. The portfolio is structured to add value through interest rate, yield curve and credit management.

 

How does the Fund meet your needs?

  • Income
    Income generation

    The goal of the fund is to generate a return for you by investing in a variety of fixed interest securities that generate an attractive and consistent income stream.

  • diversification
    Highly diversified portfolio

    The fund has exposure to a well diversified portfolio of longer term fixed interest securities. This helps minimise risk and broaden the opportunity set.

  • Liquidity
    Liquidity

    An advantage of the fund is the relative liquidity it offers you compared to investments in individual bonds or other fixed income securities.

Quarterly commentary

With the recent RBNZ rate cut and forecast for some additional easing of policy rates, interest rates are biased to the downside. However, markets have this largely priced, with 50 bps of rate cuts expected by early 2020. Despite this pricing, we have extended duration on the back of the current momentum for lower yields, along with continuing deterioration in business and inflation data globally, and a continuing softening in New Zealand data.


The US Federal Reserve and the Reserve Bank of Australia are expected to cut interest rates and the pressure for lower yields remains while the trade tensions remain. Our bias is to add duration on any move higher in interest rates.


The Fund retains a curve flattener in government bonds and a steepener in swaps. Overall, we have a curve flattening exposure and are likely to retain the current position as the global outlook has weakened. We are now more focused on relative value opportunities along the curve.


Swap spreads have been more volatile. Recently the prospect of increased long maturity bond supply and bias to sell government bonds has seen swap spreads narrow significantly. Post budget New Zealand Debt Management (NZDM) has announced the syndication of a new 2031 bond and increased supply of $2 billion per year for the next two years, causing swap spreads to fall further. We will look for opportunities to buy government bonds when we feel swap spreads have reached an extreme level.

Risk factors remain globally. However, the portfolio has been investing in shorter dated and higher rated credit recently to take advantage of good carry and roll from these positions. While we are investing in credit, the overall risk is lower given we are late cycle and there are risks for wider credit spreads toward the end of 2019. We now look more actively trade certain high grade credits as their spreads move in a range.


The portfolio retains an overweight to inflation linked bonds. As global central banks become more dovish, there is support for higher breakeven inflation globally. A dovish RBNZ also supports the case in New Zealand. The NZDM post budget has halved the issuance of Inflation Indexed Bonds (IIBs) in the coming fiscal year. This will also support price tension in IIBs and should result in better relative performance of the bonds going forward.

Fund facts as at 30 September 2019

Product code AIF F
Product inception date 16 May 1995
APIR code -
Type of fund Managed fund. This fund is a Portfolio Investment Entity (PIE).
Investment objective The objective of the Fund is to provide a gross return above the return of the Bloomberg NZBond Composite 0+ Yr Index on a rolling three year basis
Investment approach The NZ Fixed Interest Fund predominately invests in corporate and government securities and will frequently utilise derivatives to manage risk. The Fund will not invest into collateralised debt obligations, collateralised loan obligations or credit default swaps.
Fund net value $2,270.6 million
Minimum suggested timeframe Medium term (minimum three years)
Distribution frequency Six monthly (March and September)
Benchmark Bloomberg NZBond Composite 0+ Yr Index on a rolling three year basis
Platform access Direct with AMP Capital, Aegis, FNZ.

Risk Indicator

Risk indicators

Unit Prices

As at 18 Nov 2019
Buy
1.77224
Sell
1.77046

Performance

As at 31 Oct 2019
1 Month -0.70%
3 Month 1.15%
1 Year 7.81%
3 Year 5.28%
5 Year 5.93%
Past performance is not a reliable indicator of future performance.

Important note: The unit prices displayed in this section are indicative only

Unit prices are provided for your information only and are not guaranteed. They are based on historical data and you should not rely on the above information as the basis for making any investment, financial or other decision as past unit prices are not a reliable indicator of future unit prices. During the time it takes to process an application or redemption application, the unit price may vary and the actual unit prices applying to applications and redemptions may differ from those displayed in this section. For more information on how AMP Capital can help you, please speak to your Financial Adviser or call us on 0800 400 499.

Important notes: Past Performance

Past performance is not a reliable indicator of future performance.

Our fund performance figures are shown before tax, before fees and assume that income is reinvested. Neither AMP Capital Investors (New Zealand) Limited nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return. Past performance is not a reliable indicator of future performance. Every effort has been made to ensure the accuracy of this information, however, AMP Capital (New Zealand) Limited nor any other company in the AMP Group gives any warranty of reliability, or accuracy, nor accepts any responsibility arising in any way from errors or omissions.

 

Product Disclosure Statements (PDSs) for the offer of the AMP Capital Investment Funds have been lodged with the Registrar of Financial Service Providers. The Cash and Fixed Interest Funds PDS can be obtained from our website and from the Disclose website www.business.govt.nz/disclose. Nothing on this page is financial advice for the purposes of the Financial Advisers Act 2008 and any associated regulations. You can seek advice from a financial advisor to help you make an investment decision. The Manager and the Issuer of the Fund is AMP Investment Management (NZ) Limited, Meridian Building, Level 1, Queens Wharf, Wellington.

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