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Nikko AM Australian Bond Fund receives a Highly Recommended Rating

"A conservative, competitively priced Australian fixed interest fund which has delivered solid risk-adjusted returns relative to most peers"

Lonsec, 16 Sept 2020

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Our mission is to deliver consistent, positive returns with no surprises


The Nikko Asset Management fixed income team is a relative value manager that focuses on providing investors with consistent positive returns no matter the conditions.

The Nikko AM Australian Bond fund invests in a diversified portfolio of investment grade Australian fixed income assets, that aims to deliver an active return for a competitive fee.

Investment Objective

The Fund aims to outperform the Bloomberg AusBond Composite 0 + YR Index over any three-year rolling period, before fees, expenses and taxes.

Consistent positive returns

  • Our goal is to achieve higher income than the index.
  • To capture this excess alpha, we use our proprietary system to analyse the relative value between ~3,000 Australian interest rate structures, bonds and sectors.
  • This process delivers a universe of opportunities that are interrogated by our portfolio managers who apply their investment methodology, experience and economic statistics to reinforce their conviction and identify the best returning securities – those that outperform the others.
  • Unlike traditional duration and credit spread managers, we don’t have to rely on picking market direction to capture returns. Instead, we look for the best relative value between securities and sectors that will deliver consistent positive returns for investors.

Portfolio diversification

  • Our Fund is positively correlated with equities when they are rising and negatively correlated when they are falling. This allows us to consistently deliver a positive return no matter the market conditions – offering the diversification investors expect from a fixed income investment.
  • The Fund consists primarily of Australian investment grade securities, which helps mitigate risk.

Proven track record

  • Our mission to provide a core fixed income allocation in your portfolio that provides returns with no surprises.  That‘s how we see our mission, that’s who we are.
  • We have the tools to generate alpha in all conditions because we keep our positions appropriately sized and don't focus everything on one position. Relative value helps dictate how and where we hold positions time after time.

Fund characteristics

  • Active, opportunistic & disciplined investment style
  • Diversified across all Australian fixed income sectors
  • Only invests in investment grade securities rated BBB- and above
  • ‘Top-down’ value-adding process merged with ‘bottom-up’ quantitative portfolio construction and credit process
  • Typically invests in 70-130 securities
  • Modified duration of +/- 1.5 years relative to the benchmark duration
Portfolio Manager Darren Langer
Inception Date July 2000
Benchmark* Bloomberg AusBond Composite 0 + YR Index
Management Cost 0.30% p.a.
Minimum initial investment** $10,000
Minimum additional investment** $1,000
Distribution frequency^ Quarterly following 30 September, 31 December, 31 March and 30 June

* The UBS Australia Bond Indexes have been acquired by Bloomberg, consequently from 29 September 2014 the name of the benchmark has changed from UBS Australian Composite Bond (All Maturities) Index to Bloomberg AusBond Composite 0 + YR Index.
** Nikko Asset Management Australia Limited ABN 34 002 542 038 AFSL 229664 (Nikko AM Australia), is the Responsible Entity and the issuer of units in the Fund and may accept lower amounts at any time at its discretion.
^ Fund returns can be volatile. Nikko AM Australia does not guarantee to provide distributions, or what the amount of distributions may be.

Fund total return figures are calculated using redemption prices, net of fees, assume the reinvestment of distributions and do not take into account taxation.

For periods to {{dateFormat data.performanceDate 'j F Y'}}

Source: BNP Paribas.
Inception Date: July 2000
The value of an investment can rise and fall and past performance is not indicative of future performance. Investment in a fund is not guaranteed. The value of investments will fluctuate up and down with the assets of the fund.

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The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May 2020) referred to in this document is limited to “General Advice” (s766BCorporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

The rating issued September 2020 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2020 Lonsec. All rights reserved.

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