OneAnswer KiwiSaver Scheme International Fixed Interest Fund

• Global bond markets were volatile, influenced by diverging central bank signals and fiscal concerns. In the US, the yield on the 10-year government bond rose sharply early in the period following a credit rating downgrade and strong consumer data. However, it later declined as inflation moderated and concerns over the impact of tariffs on prices eased.
• The Federal Reserve held rates steady but maintained a data-dependent stance, leaving markets uncertain about the timing of future policy shifts. Tensions resurfaced between Fed Chair Jerome Powell and President Donald Trump, with the President urging aggressive rate cuts and even suggesting he would welcome Powell’s resignation. The yield on the US 10-year government bond finished the quarter mostly unchanged at 4.23%, having at one point reached a high of 4.60%.
• In contrast, European bond markets were more stable, reflecting cautious optimism. The European Central Bank adopted a dovish tone, implementing two separate 25-basis-point cuts. Combined with subdued inflation, this helped anchor investor expectations. The yield on the German 10-year government bond fell by nearly 15 basis points over the quarter (when bond yields fall, bond prices go up).
• The fund invests in three underlying fixed interest strategies, managed by two external fund managers – Northern Trust Asset Management and PIMCO. This approach provides diversification and access to a wide range of fixed interest securities across many geographical markets. All three underlying strategies delivered positive returns.

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

• Fixed interest assets issued by governments or international companies
• Cash and cash equivalents.

This chart shows 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.