OneAnswer KiwiSaver Scheme New Zealand Fixed Interest Fund

• New Zealand bond markets finished the quarter modestly higher, helped by inflation falling back to within its target range, and a weaker economic backdrop, which prompted the Reserve Bank of New Zealand (RBNZ) to cut the Official Cash Rate (OCR) by 100 basis points. 
• Inflation, as measured by the Consumer Price Index, fell to an annual rate of 2.2% for the period to 30 September, inside the central bank’s 1-3% target range. While prices are still rising, they’re doing so at a slower pace – giving the RBNZ confidence that inflation is coming under control. 
• Elsewhere, growth, as measured by GDP, fell 1.0% in the third quarter. It followed a 1.1% slump in the previous quarter. These were the biggest quarterly falls since late 2021 – at the height of the Covid-19 pandemic and lockdowns. Meanwhile, adding to the downbeat sentiment was retail sales, which have now registered nine consecutive quarters of decline, and unemployment, which rose to 4.8% in the September quarter, up from 4.6%.
• Despite the 100 basis points of cuts to the OCR, New Zealand bond yields remained elevated, largely driven by offshore markets, particularly in the US, where the Federal Reserve (the Fed) scaled back its expectations for future rate cuts as progress on bringing inflation down slowed. By the end of the quarter, the yield on the New Zealand 10-year government bond had risen 17 basis points, to 4.41%.
• In terms of fund activity, new holdings were established in New Zealand bank, BNZ, and Australian rail transport company, Aurizon Network PTY.

The fund invests mainly in New Zealand fixed interest assets. Investments may include:

• Fixed interest assets in New Zealand dollars, or issued by New Zealand located or incorporated entities and hedged back to New Zealand dollars
• Cash and cash equivalents.

This chart show the mix of assets that the fund generally intends to invest in – 100% fixed interest.

See the fund's actual investment mix on page 3 of the fund update.