tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, December 3rd, 7:21PM

Investments

rss
Investment News

Nikko reveals new strategy for income investors

Low-risk alternative to term deposits or bonus bonds – Nikko AM NZ's new income fund.

Wednesday, September 16th 2020, 6:16AM 1 Comment

by Daniel Smith

George Carter

As record-low interest rates continue to narrow the opportunity for low-risk investors, Nikko AM has unveiled its new Income Fund, providing investors with a 3% defined income rate on their investment.

The income fund has been a fixture of Nikko AM for a number of years, but the current strategy came into being around July 2020.

Managing director George Carter told Good Returns: “We have long been thinking about the need that this fund has been aiming to meet. Covid and the historically low interest rates have brought that into sharp focus.”

Carter sees this fund as part of a financial strategy that extends beyond covid: “The need for yield is not a post-covid issue and there’s no silver bullet. There’s only a number of ways to generate yield, you can take risk, duration, credit risk, equity, property. These tools that we have to generate yield haven’t been changed by covid. What’s different are investors’ risk appetites.”

The fund generates income through a diversified portfolio comprising up to 30% shares alongside a base of fixed income assets.

Carter explains the fund is looking to “hold a reasonable amount of duration in those bonds, as those bonds get shorter maturity we will sell and reinvest in bonds back at a longer maturity. Which keeps our yield higher than it otherwise could be.”

The bonds portion of the fund is supplemented by 24% held in shares. Carter says that “there we are targeting companies like, Contact, Chorus, Vector, Mercury. Companies that are paying good dividends. They are there to give us options.”

Nikko AM have separated themselves from other low-risk funds by having a declared distribution rate announced at the start of the year, so investors will know when, and how much will be paid out of the fund despite shifts in the market.

But Carter is quick to mention that the best tool at a fund's disposal is the skills of their investment managers, “we have an extremely skilful set of portfolio managers on our team, we have great practitioners working to deliver an outcome that we see a need for in the market”.

Carter muses that we could see many more of these kinds of funds as investors look for security in a post-covid world, without surrendering their yield to historically-low interest rates.

“If you can get the yield that you are looking for from just putting your money in a bank that’s a relatively easy strategy. Investing in a range of corporate bonds, government bonds, managing yields and duration bonds and reinvesting back into longer duration bonds, whilst also monitoring the equity market, that’s getting a lot more complicated.

“So if you can go to a professional fund manager and have investment professionals looking at the portfolio, that allows investors to get on with what they want to be doing, which probably isn’t managing their assets on a day to day basis.”

Tags: Nikko AM

« Reporting season and forecasting a waste of timeESG themes from company reporting season »

Special Offers

Comments from our readers

On 24 September 2020 at 2:03 pm Graeme33 said:
They would have done much better ...if they had pushed their association with ARK...and come up with a NZ Based offering..Graeme Adams...System Futures Ltd

Sign In to add your comment

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

Edison Investment Research
  • Securities Trust of Scotland
    2 December 2020
    The Trojan horse
    Securities Trust of Scotland (STS) has had an eventful 2020. Following a competitive selection process, the board appointed Troy Asset Management (Troy...
  • The Scottish Investment Trust
    2 December 2020
    Keeping income flowing in a dividend drought
    The Scottish Investment Trust (SCIN) aims to give investors an accessible, low-cost way to invest in undervalued international companies, while boosting...
  • Genesis Emerging Markets Fund
    30 November 2020
    EM – high potential amid new investment themes
    Genesis Emerging Markets Fund (GSS) remains broadly diversified across a range of sectors and countries and is well positioned to take advantage of a further...
© 2020 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Heartland Bank 0.75  
Heartland Bank 0.75  
Rabobank 0.75  
Based on a $50,000 deposit
More Rates »
Cash PIE Rates

Cash Funds

Institution Rate 33% 39%
ANZ 0.10    0.10    0.11
ASB Bank 0.05    0.41    0.42
ASB Bank 0.05    0.59    0.56
ASB Bank 0.05    0.61    0.64
ASB Bank 0.08    0.66    0.69
ASB Bank 0.08    0.72    0.75
BNZ 0.10    0.10    0.10
Heartland Bank 1.00    2.59    2.70
Kiwibank 0.05    -    -
Kiwibank 0.25    -    -
Nelson Building Society -    -    -
SBS Bank -    -    -
TSB Bank 0.25    0.25    0.26
Westpac 0.35    0.36    0.38
Westpac 0.05    0.05    0.05
Westpac 0.35    0.36    0.38

Term Funds

Institution Rate 33% 39%
ANZ Term Fund - 90 days 0.35    0.36    0.37
ANZ Term fund - 12 months 0.85    0.87    0.91
ANZ Term Fund - 120 days 0.45    0.46    0.48
ANZ Term fund - 6 months 0.85    0.87    0.91
ANZ Term Fund - 150 days 0.55    0.56    0.59
ANZ Term Fund - 9 months 0.85    0.87    0.91
ANZ Term Fund - 18 months 0.90    0.92    0.96
ANZ Term Fund - 2 years 0.90    0.92    0.96
ANZ Term Fund - 5 years 0.90    0.92    0.96
ASB Bank Term Fund - 90 days 0.35    0.36    0.37
ASB Bank Term Fund - 6 months 0.80    0.82    0.85
ASB Bank Term Fund - 12 months 0.75    0.76    0.79
ASB Bank Term Fund - 18 months 0.80    0.82    0.85
ASB Bank Term Fund - 2 years 0.80    0.82    0.85
ASB Bank Term Fund - 5 years 1.00    1.02    1.07
ASB Bank Term Fund - 9 months 0.75    0.76    0.79
BNZ Term PIE - 120 days 0.55    0.56    0.59
BNZ Term PIE - 150 days 0.55    0.56    0.59
BNZ Term PIE - 5 years 0.90    0.91    0.95
BNZ Term PIE - 2 years 0.85    0.87    0.91
BNZ Term PIE - 18 months 0.85    0.87    0.91
BNZ Term PIE - 12 months 0.85    0.87    0.91
BNZ Term PIE - 9 months 0.85    0.87    0.91
BNZ Term PIE - 6 months 0.85    0.87    0.91
BNZ Term PIE - 90 days 0.40    0.41    0.42
Co-operative Bank PIE Term Fund - 6 months -    -    -
Heartland Bank Term Deposit PIE - 12 months 1.05    1.08    1.12
Heartland Bank Term Deposit PIE - 6 months 1.10    1.13    1.18
Heartland Bank Term Deposit PIE - 9 months 1.05    1.08    1.12
Heartland Bank Term Deposit PIE - 18 months 1.05    1.08    1.12
Heartland Bank Term Deposit PIE - 2 years 1.30    1.33    1.39
Heartland Bank Term Deposit PIE - 5 years 1.05    1.08    1.12
Kiwibank Term Deposit Fund - 90 days 0.40    0.41    0.42
Kiwibank Term Deposit Fund - 6 months 0.90    0.91    0.95
Kiwibank Term Deposit Fund - 12 months 0.90    0.91    0.95
Kiwibank Term Deposit Fund - 150 days 0.60    0.61    0.64
Kiwibank Term Deposit Fund - 120 days 0.50    0.51    0.53
Kiwibank Term Deposit Fund - 9 months 0.90    0.91    0.95
Westpac Term PIE Fund - 150 days 0.55    0.56    0.59
Westpac Term PIE Fund - 120 days 0.45    0.46    0.47
Westpac Term PIE Fund - 18 months 0.80    0.81    0.84
Westpac Term PIE Fund - 12 months 0.80    0.81    0.84
Westpac Term PIE Fund - 6 months 0.80    0.81    0.84
Westpac Term PIE Fund - 9 months 0.80    0.81    0.84
Westpac Term PIE Fund - 90 days 0.35    0.36    0.37
Westpac Term PIE Fund - 2 years 0.85    0.87    0.91
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com