OneAnswer KiwiSaver Scheme New Zealand Fixed Interest Fund

• New Zealand fixed interest markets followed global patterns. Bond prices declined early in the quarter before recovering later, supported by a global flight to safety and some soft economic data, which raised concerns about the strength of the economic recovery.
• In New Zealand, the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) twice, bringing it down to 3.25%. In a surprising move, one committee member voted to keep rates unchanged at the May meeting, prompting a formal vote that resulted in a 5-1 decision to cut the OCR. The RBNZ also revised its forecasts for various indicators, including a downward revision to its Q2 GDP growth rate to 0.3%. It anticipates the OCR will settle around 3% by the end of 2025.
• Meanwhile, strong Q1 GDP data showed the economy grew by 0.8%, exceeding most forecasts. Growth was driven by robust performances in manufacturing, business services, and mining, while the arts and recreation sector saw a decline. However, the Q2 Quarterly Survey of Business Opinion (QSBO) – released late in the quarter – indicated the local economy continues to face headwinds after a strong start to the year. Notably, trading activity declined during the quarter, while the labour market continues to soften.
• Elsewhere, inflation concerns resurfaced, largely due to rising food prices, which increased at an annual rate of 4.4%. Encouragingly, the QSBO showed easing pressure on costs and pricing, helping to temper inflationary fears.

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.