In a month of volatile headlines, largely on global tariffs, the Income Fund returned a modest rise of +0.4%, in line with the benchmark which also rose +0.4%. 

The main driver of returns for the month were stable interest rates in New Zealand, where economic data met market expectations. This drove the fund return to be roughly in line with its yield, which currently stands at 5.3%. 

As of writing, the US Government has announced a swarth of global tariffs on goods imported into the US with a minimum of 10%, and up to 30%-40% depending on the trade imbalance as calculated by the White House. While it is too soon to have a clear view on the various outcomes for global economies and businesses, it is likely that the price paid for goods in the US will rise, leading to a reduction in consumption. We will monitor developments closely. 

Highlights for the month were those positions with high initial yields such as those issued by Oceania Healthcare and TR Group. These New Zealand-based businesses have done a good job of navigating a difficult economic environment in the last few years, seeing their cost of borrowing remain steady while lower quality businesses have seen this cost increase. 

A lowlight for March was Grifols as the company’s bonds dropped in line with a global re-pricing of bonds with lower credit ratings. This saw the value drop by 1% during March but is still higher than our initial investment as the company continues to drive an operational turnaround.