KiwiSaver
KiwiSaver Income Strategy
The investment objective of the Income Strategy 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 Income Strategy is anticipated to mainly own and trade New Zealand, Australian and international bonds and other authorised asset classes over the minimum suggested investment timeframe.
Life Cycle allocates 5% of a member's funds to this Strategy until the member reaches age 58, from when their allocation will gradually increase to 27% by age 65.
More Information
Potential for greater than term deposit returns
The Strategy is primarily invested in New Zealand, Australia and United States-issued corporate bonds with a time to maturity of around three years. Over the business cycle, the Strategy offers investors the potential for greater than term deposit returns. Global corporate bonds also typically offer higher yields than government bonds of similar duration.
The returns from corporate bonds do not typically rise and fall at the same time as the share market, so owning both shares and bonds can even out some of the volatility in an investor’s KiwiSaver or provide Members with a more stable source of funds for short to medium-term purposes such as a first home purchase.
Professional managed portfolio with currency hedging
The Strategy offers Members a professionally managed selection of corporate bonds. By accessing these bonds through a PIE portfolio, NZ Funds can ensure Members’ foreign currency exposure is hedged back into New Zealand dollars, as and when is needed throughout the business cycle. NZ Funds’ research and management team has been building and managing diversified portfolios of local and international bonds for New Zealand clients for over 20 years.
The Strategy 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 Strategy’s exposure to interest rates at different points in time during the business cycle. The Strategy may also own futures contracts and credit derivative swaps on highly 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 local and international bonds is virtually impossible for retail investors as the minimum dollar amount for large global bond issues can be considerable. It is also difficult to withdraw or deposit small amounts regularly when bonds are held in an individual’s name. In addition to being a portfolio stabiliser for long-term KiwiSaver investors, the Strategy is designed so that Members can easily set up a regular withdrawal programme (once they reach age 65) to fund their retirement.
Returns
Since inception (1 November 2010) to 30 September 2026
| Annualised | Cumulative | |
|---|---|---|
| Year to date | -0.50% | -0.50% |
| 1 Month | -0.62% | -0.62% |
| 3 Months | -0.75% | -0.75% |
| 6 Months | 0.47% | 0.47% |
| 1 Year | -0.11% | -0.11% |
| 2 Years | 1.69% | 3.41% |
| 3 Years | 4.20% | 13.13% |
| 5 Years | 2.36% | 12.37% |
| 10 years | 2.78% | 31.51% |
| Since Inception | 3.47% | 72.27% |
| Maximum Decline 12 Months | -1.77% | -1.77% |
| Volatility 5 Years | 6.22% | 6.22% |
Notes
Since inception (1 November 2010) to 30 September 2026. Returns are stated after full Strategy 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 Strategy over the 5 years ending 30 September 2026.
Performance
Since inception (1 November 2010) 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 Strategy performance. In the graph above, quarter ends are full standard calendar year quarters except the first quarter from inception (1 November 2010) which is not a full quarter.
Holdings at 30 September 2026
| Asset Allocation | Country | Sector | Exposure |
|---|---|---|---|
| New Zealand Bonds - Top 10 | 23.5% | ||
| - Bank of New Zealand 5.872% 01/09/2028 New Zealand Banks 4.1% | |||
| - Kiwibank 4.93% Perpetual New Zealand Banks 2.7% | |||
| - Mercury Ltd 5.73% 13/05/2052 New Zealand Utilities 2.3% | |||
| - Bank of New Zealand 4.889% 19/11/2029 New Zealand Banks 2.2% | |||
| - ANZ Bank New Zealand 7.6 % Perpetual New Zealand Banks 2.1% | |||
| - Bank of New Zealand 7.3% Perpetual New Zealand Banks 1.9% | |||
| - Westpac Ltd 6.73% 14/02/2034 New Zealand Banks 1.5% | |||
| - Spark Finance 5.21% 18/09/2029 New Zealand Telecommunications 1.3% | |||
| - Meridian 4.55% 11/03/2032 New Zealand Utilities 1.1% | |||
| - Infratil 7.06% 17/12/2031 New Zealand Financial Services 1.0% | |||
| Global Bonds - Top 10 | 24.9% | ||
| - European Investment Grade Corporate SCR Index Europe Index Futures 5.6% | |||
| - John Deere Capital Corp 4.5% 16/01/2029 USA Industrial 1.6% | |||
| - Novartis Finance AG 0% 23/09/2028 Europe Healthcare 1.4% | |||
| - Apple Inc 4% 05/10/2028 USA Technology 1.3% | |||
| - Amgen Inc 5.15% 02/03/2028 USA Healthcare 1.2% | |||
| - Citigroup Inc 4.125% 25/07/2028 USA Banks 1.1% | |||
| - Goldman Sachs Group 5.727% 25/04/2030 USA Financial Services 1.1% | |||
| - JPMorgan Chase 5.299% 24/07/2029 USA Banks 1.0% | |||
| - Bank of America Corp 5.202% 25/04/2029 USA Banks 1.0% | |||
| - Morgan Stanley 5.164% 20/04/2029 USA Financial Services 1.0% | |||
| Bond Exposure | 48.4% | ||
| Credit Default Swaps†Australia Credit Default Swaps 9.6% | |||
| Government Bond Futures†USA Government Bonds 1.4% | |||
| Interest Rate Swaps (Long/Short) New Zealand Interest Rate Swaps 0.1% | |||
| Other Exposure | 11.1% | ||
| Cash New Zealand Cash 40.6% | |||
| Gross Exposure | 100.0% | ||
| 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 Strategy is made up of the S&P/NZX Investment Grade Corporate Bond Total Return Index (50%) and the Bloomberg Global Aggregate Corporate - 1 -3 Years Total Return Index Hedged USD (50%). You cannot invest in these indices and these indices do 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 NZ Funds KiwiSaver Scheme 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
The NZ Funds KiwiSaver Scheme, which incorporates the Income Strategy, is issued by New Zealand Funds Management Limited. Further information is contained in the Strategy Profiles and in the NZ Funds KiwiSaver Scheme Product Disclosure Statement.