Liquidity Fund as at 30 September 2024
The Liquidity Fund continued to deliver healthy returns in the third quarter, driven by strong cash yields. Over the past year, cash has provided solid returns with minimal risk, which has been great for investors with a short investment time horizon.
The Reserve Bank dropped New Zealand's Official Cash Rate (OCR) to 5.25% during the quarter, with their focus shifting from controlling inflation to reducing damage to the economy. Given the ongoing weakness in the New Zealand economy, we anticipate further OCR cuts in the near term.
With rates heading downwards, cash yields are following, which means the expected return of the Liquidity fund will be slightly lower moving. However, this should not be a significant concern for investors, as the primary objective of this fund is to safeguard your savings, rather than aggressively grow your investment.