Active Series
New Zealand & Australian Bonds
The investment objective of the NZ Funds & Australian Bonds Portfolio is to generate income by investing in a range of income producing assets and other assets in a way that seeks to mitigate the downside through active management.
The Portfolio is anticipated to mainly own and trade New Zealand & Australian bonds and other authorised asset classes over the minimum suggested timeframe.
More Information
Potential for greater than term deposit returns
The Portfolio is primarily invested in New Zealand corporate bonds with an approximate time to maturity of between three and four years. Over the business cycle, the Portfolio offers investors the potential for greater than term deposit returns. Corporate bonds also typically offer higher yields than government bonds of similar duration.
The returns from a New Zealand bond portfolio do not typically rise and fall at the same time as the New Zealand share market, so owning both New Zealand and Australian shares and bonds can even out some of the volatility in an investor’s portfolio. Cash and bonds can provide investors with a more stable source of funds for short and medium-term spending needs.
Professionally managed portfolio
The Portfolio offers investors a professionally managed selection of corporate bonds. Buying a diversified portfolio of corporate (or government) bonds directly can be difficult and expensive to achieve, as many bonds are primarily available for purchase at the time of issue. NZ Funds’ Investment Team researches New Zealand bonds at issue and then purchases the bonds for the Portfolio, so investors can access them at will.
The Portfolio may also use professional investment tools and techniques which are not normally available to private investors. These include interest rate swap contracts with major trading banks to increase or reduce the Portfolio’s exposure to interest rates at different points in time during the business cycle. The Portfolio may also own futures contracts and credit derivative swaps on diversified indices of corporate bonds to spread the risk of bond defaults over a larger number of corporate issues.
Highly liquid & convenient
Building an easily accessible but highly diversified portfolio of New Zealand and selected Australian bonds can be time consuming and expensive. It can also be difficult to withdraw or deposit small amounts regularly (for example, to fund retirement spending or family trust distributions) when bonds need to be purchased or sold individually.
By using a managed PIE portfolio, investors can deposit or withdraw in a highly liquid manner small or large amounts whenever they wish, and these amounts will be taken from (or applied to) all the securities in the Portfolio. This ensures each bond in the Portfolio retains its optimal weight. Similarly, all interest payments received are reinvested avoiding both administrative hassle and cost.
Returns
Since inception (23 July 2008) to 30 September 2026
| Annualised | Cumulative | |
|---|---|---|
| Year to date | 0.89% | 0.89% |
| 1 Month | -0.49% | -0.49% |
| 3 Months | -0.88% | -0.88% |
| 6 Months | 1.27% | 1.27% |
| 1 Year | 1.24% | 1.24% |
| 2 Years | 3.24% | 6.58% |
| 3 Years | 5.84% | 18.56% |
| 5 Years | 2.56% | 13.48% |
| 10 Years | 3.00% | 34.43% |
| Since Inception | 4.01% | 104.56% |
| Maximum Decline 12 Months | -1.20% | -1.20% |
| Volatility 5 Years | 6.70% | 6.70% |
Notes
Since inception (23 July 2008) to 30 September 2026. Returns are stated after full Portfolio fees and expenses including performance fees (where applicable), but before any advisory fees or investor tax. No management fee rebates have been applied to these numbers, see PDS for management fee rebate criteria. Past performance is not necessarily an indication of future returns. Maximum decline represents the largest decline in value in the previous 12 months. Volatility 5 Years is the annualised standard deviation calculated from weekly returns of the Portfolio over the 5 years ending 30 September 2026.
Performance
Since inception (23 July 2008) to 30 September 2026
Notes
The graph displays the change in value of a notional investment of $100 after full fees and tax (assuming a tax rate of 28%) but before any advisory fees (if applicable). No management fee rebates have been applied in the graphs of individual Portfolio performance. In the graph above, quarter ends are full standard calendar year quarters except the first quarter from inception (23 July 2008) which is not a full quarter.
Holdings at 30 September 2026
| Asset Allocation | Country | Sector | Exposure |
|---|---|---|---|
| New Zealand Bonds - Top 10 | 46.6% | ||
| Bank of New Zealand 5.872% 01/09/2028 New Zealand Banks 8.2% | |||
| Kiwibank 4.93% Perpetual New Zealand Banks 5.3% | |||
| Mercury Ltd 5.73% 13/05/2052 New Zealand Utilities 4.6% | |||
| Bank of New Zealand 4.889% 19/11/2029 New Zealand Banks 4.4% | |||
| ANZ Bank New Zealand 7.6 % Perpetual New Zealand Banks 4.1% | |||
| Bank of New Zealand 7.3% Perpetual New Zealand Banks 3.8% | |||
| Westpac Ltd 6.73% 14/02/2034 New Zealand Banks 3.0% | |||
| Spark Finance 5.21% 18/09/2029 New Zealand Telecommunications 2.5% | |||
| Meridian 4.55% 11/03/2032 New Zealand Utilities 2.2% | |||
| Infratil 7.06% 17/12/2031 New Zealand Financial Services 2.0% | |||
| Bank of New Zealand 5.872% 01/09/2028 New Zealand Banks 8.2% | |||
| Kiwibank 4.93% Perpetual New Zealand Banks 5.3% | |||
| Mercury Ltd 5.73% 13/05/2052 New Zealand Utilities 4.6% | |||
| Bank of New Zealand 4.889% 19/11/2029 New Zealand Banks 4.4% | |||
| ANZ Bank New Zealand 7.6 % Perpetual New Zealand Banks 4.1% | |||
| Bank of New Zealand 7.3% Perpetual New Zealand Banks 3.8% | |||
| Westpac Ltd 6.73% 14/02/2034 New Zealand Banks 3.0% | |||
| Spark Finance 5.21% 18/09/2029 New Zealand Telecommunications 2.5% | |||
| Meridian 4.55% 11/03/2032 New Zealand Utilities 2.2% | |||
| Infratil 7.06% 17/12/2031 New Zealand Financial Services 2.0% | |||
| Global Bonds - Top 10 | 1.8% | ||
| Peet 8.5% 30/09/2029 Australia Real Estate 1.8% | |||
| Bond Exposure | 48.4% | ||
| Credit Default Swaps†Australia Credit Default Swaps 3.8% | |||
| Interest Rate Swaps (Long/Short) New Zealand Interest Rate Swaps 0.1% | |||
| Other Exposure | 3.9% | ||
| Cash New Zealand Cash 47.7% | |||
| Gross Exposure | 100% | ||
| Less Downside Mitigation | 0.0% | ||
| Estimated Net Exposure | 100.0% |
† Share market volatility adjusted weight as per NZ Funds' risk management model.
Notes
The market index for the Portfolio is the S&P/NZX Investment Grade Corporate Bond Total Return Index. You cannot invest in this index and it does not take Environmental, Social and Governance (ESG) factors into account.
NZ Funds takes ESG criteria into account in its investment decisions. This impacts on our investment choices. Our ESG criteria are set out in the NZ Funds Active Series SIPO. NZ Funds is an active manager so the securities listed above may not be held in the future. Past performance is not an indicator of future returns. A full list of securities held by the Strategy is available through NZ Funds Digital Wallet. Rounding may affect totals.
Overview
Further information
Further information is contained in the Portfolio Profiles and in the NZ Funds Active Series Product Disclosure Statement (PDS).