Low yields.

[Snoopy]

A third reason why the value of NZB is holding up could be retained earnings from from the balance of income from fund constituents, (less management fees of course), that has not been not paid out.. Using the quoted fund yield of 5.59% as at 31st July 2023, an actual calculated gross yield payout percentage number of 1.6%, a tax rate of 28% and a management fee of 0.54%, we can estimate the half year retained fund income that remains available for reinvestment as follows:

1/2 x (1-0.28) x (5.59%-1.6%-0.54%)= 1.24% (return on assets under management)

This represents a net retained income stream by NZB of:
0.0124 x 116.927m x $2.86= $4.15m

This is equivalent to $4.15m / 116.927m = 3.5cpu

If we make an alternative assumption, contrary to what I wrote earlier in 'post 35', that NZB does mark to market the value of their constituent bonds after all, do reasons 2 (post 36) and 3 alone provide enough new capital into NZB to keep the NZB unit price stable against a background of falling bond fund constituent prices?

3.5cpu + 9cpu = 12.5cpu, a figure well short of the 45cpu that I determined was likely lost. The answer therefore is 'no', Operational assets recovered, combined with the documented new capital injection, cannot make up for the observed capital loss effect of rising interest rates observed in comparative bonds.

As Sherlock Holmes would have said, by eliminating the likely explanations of a phenomena, then the explanation(s) that remain, however unlikely they may seem at first glance, are probably true. Thus unless I have missed another obvious explanation (which may be the case, because I am not Sherlock Holmes), it does seem that NZB are not marking their constituent bonds to market!

I invite any budding Sherlocks out there to prove me wrong. I hope you can!

SNOOPY