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Forsyth Barr New Zealand Fixed Interest Fund

(formerly the Forsyth Barr Premium Yield Fund)

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

Unit Price

AS AT 4 May 2021

1.9574 NZD

The unit prices shown do not take into account any adjustment for PIE tax.
Buy/sell spreads may apply when transacting. There are currently none.

Month End Unit Price

As at 31 Mar 2021

1.9491 NZD

Manager's Comment

Market Commentary

The March quarter was a difficult period for New Zealand fixed interest investors. Indeed, returns for the Forsyth Barr New Zealand Fixed Interest Fund were negative over the period.

Portfolio Positioning

Over the quarter we did take the opportunity to reduce cash holdings by around 10%, purchasing bonds with maturities within three to six years; a strategy that we suggested we would execute back at the end of last year.

This strategy has increased the portfolio’s duration, or interest rate sensitivity, to around 3.40 years which is still less than the duration of the fund’s market index of close to 3.75 years. 

Outlook

New Zealand’s economy has proven to be far more resilient than we originally expected 12 months ago. Broadly speaking, consumer activity, has returned to levels prior to the emergence of the COVID-19 virus.

We are not sure how the Government’s initiative to make residential rental properties less attractive to private sector landlords will impact on the economy’s performance. While the recent move higher in house prices may be arrested, the market pricing of inflation-linked bonds suggests that domestic inflation is set to move up to the Reserve Bank of New Zealand’s inflation target of 2%.

Against this outlook for inflation, we consider that domestic interest rates are simply too low.

We also see capacity constraints globally; a stellar 5.4% global growth rate tipped by the IMF over 2021 is likely to result in a spike of international inflation rates.

Not surprisingly, we continue with our belief that over the course of this year that the RBNZ will need to gradually reduce the amount of monetary policy assistance from current levels and on this basis we will continue to constrain the portfolio’s duration.

 

Major Investments

As at 31 Mar 2021

Company name Volume
Housing New Zealand 3.36% 12/06/2025 6.28%
New Zealand Local Government Funding Agency Ltd 14/04/2033 3.50% 5.95%
Wellington International Airport Limited 01/04/2030 4.00% 4.36%
New Zealand Local Government Funding Agency Ltd 15/04/2027 4.50% 4.24%
ANZ transactional bank account 3.99%
Housing New Zealand 2.97% 12/06/2023 3.92%
New Zealand Local Government Funding Agency Ltd 15/04/2025 2.75% 3.21%
New Zealand Local Government Funding Agency Ltd 15/04/2024 2.25% 3.16%
Bank of New Zealand Subordinated Note 17/12/2025 5.314% 2.93%
New Zealand Local Government Funding Agency Ltd 14/04/2022 2.75% 2.68%
Major holdings as % of total portfolio 40.71%
Total portfolio holdings 89

Performance over time

Return Comparison

As at 31 Mar 2021

1 Month 3 Months 1 Year 3 Years Since commenced operation
Net Fund Return 1 Month 0.11% 3 Months -1.18% 1 Year 2.54% 3 Years 2.62% Since commenced operation 3.82%
Gross Fund Return 1 Month 0.23% 3 Months -1.44% 1 Year 4.38% 3 Years 4.49% Since commenced operation 6.35%
S&P/NZX Investment Grade Corporate Bond Index 1 Month 0.22% 3 Months -1.95% 1 Year 2.16% 3 Years 4.13% Since commenced operation 6.07%

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 New Zealand Fixed Interest Fund here.

Fund update

As at 31 March 2021

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 31 March 2021. See more information about the risks of investing in the Product Disclosure Statement.

Target investment mix

Cash and cash equivalents 5.00%
New Zealand fixed interest 95.00%
International fixed interest 0.00%
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 0.75% p.a. of the value of your investment. This means that we pay management and administration charges along with the Supervisor fee out of this. All fees and charges are quoted exclusive of GST.

Trail commission may be paid to a Financial Adviser responsible for your Investment Funds account. Any trail fee is paid by Forsyth Barr Limited and is not a separate charge on your Investment Funds account.

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 Investment Adviser. 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.

© 2021 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 ‘regulated financial advice’ under New Zealand law has 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. For more information refer to our Financial Services Guide (AU) or Financial Advice Provider Disclosure Statement (NZ) at www.morningstar.com.au/s/fsg.pdf and ww.morningstar.au/s/fapds.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.
The Morningstar Rating is an assessment of a fund’s past performance – based on both return and risk – which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision.

 

Get in touch

23 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.