New Year Update


Happy New Year!

This year promises to be a busy and challenging one for both our business and our clients. 
Global share markets have started off the year with a tumble, which means that the rest of the year will have to rally to regain the early falls in share values.
During 2016 Trust Management will be applying for its licence as a Manager of a Managed Investment Scheme in accordance with the changes introduced by the Financial Markets Conduct Act, which will also see the introduction of a more reader friendly Product Disclosure Statement for investors in our funds.

Within the accounting arena the Public Benefit Entity Accounting Standards will also take effect this year, which will mean some clients may be required to produce a Statement of Service Provision for the first time.

On the property front, we have a number of significant transactions taking effect this year on behalf of clients with discretionary property portfolios as well as within our Property Fund. We look forward to advising you on the finalisation of these transactions.
Trust Management is well placed to meet these various challenges with a full complement of professional, qualified and dedicated staff.

Trust Management News

We would like to take this opportunity to congratulate the following individuals on attaining New Years Honours. From our experience in working with each of these individuals we can attest that these Honours are well bestowed and hard earned.


For services to Māori, the community and governance


Mr Robin Hapi has made a leadership and governance contribution to a number of sectors in New Zealand.

Mr Hapi is a former public servant and was the Chief Executive Officer of the Treaty of Waitangi Fisheries Commission for 13 years. He is the Chair of the Council of Te Wananga-o-Raukawa, and former Chair of Business and Economic Research Ltd. He is a member of the Callaghan Innovation Board, and the New Zealand Trade and Enterprise Board. He is involved in leadership roles in the Foxton community, including as President of the Foxton Rugby Club, Chair of the Foxton Save our River Trust, and a Trustee of the Foxton Flax-stripper Museum Trust. He has been a convenor of the Electoral College for the Te Awahou Project to establish a Dutch Museum/Māori arts and crafts centre in Foxton. He was Adjunct Professor at Massey University. Mr Hapi is an active member of his marae communities at Te Hauke, particularly the Kahuranaki Marae as Chairman of the Kahuranaki Trust. Mr Hapi is a Fellow of the New Zealand Institute of Management, a Chartered Fellow of the New Zealand Institute of Directors and was a judge at the 2015 New Zealand International Business Awards. 

To be Officers of the New Zealand Order of Merit (ONZM):


For services to the Anglican Church


The Most Reverend Brown Turei has served in the Anglican Church since he became ordained as a Deacon in 1949. 

Archbishop Turei was elected as the Bishop of Aotearoa in 2005, and was the first Ngāti Porou person to hold this position, and a year later was consecrated as Primate and Archbishop of the Anglican Church in Aotearoa, New Zealand and Polynesia. At 90 years of age is still active in his capacity as Archbishop. Prior to becoming Bishop, he served as the Archdeacon of Waiapū Diocese in Tairāwhiti for eight years, and as the Bishop of Tairāwhiti for 12 years. He has also served in the wider community as the Chaplain at Hukarere Māori Anglican Girls College for nine years, and as the Chaplain of the Napier Prison for four years. Archbishop Brown is widely regarded as one of the pre-eminent leaders of Māori both within the church and beyond, and is highly respected for his ability to relate to people across all races and cultures.


For services to accounting and the community


Mr Peter Hays has provided governance, management and reporting support to companies and charities.

Mr Hays has been a member of the Auckland War Memorial Trust Board for the past seven years, and is currently its Deputy Chair. His involvements have included reviewing the content and wording of the Auckland War Memorial Museum Act 1996 to ensure its appropriate amendment on the formation of the Auckland Council; updating the Museum’s governance policies; and overseeing the Trust Deed for the development of the Auckland Museum Foundation. Currently he is Chair of the Museum’s Investment Committee and Deputy Chair of its Audit and Risk Committee. He is also a former President of the University of Auckland Alumni Association and has served as a Trustee of the University of Auckland Foundation for the past twelve years. He is a Past President and Life Member of the Institute of Chartered Accountants in New Zealand. For six years he represented New Zealand on Committees and Council of the International Federation of Accountants. This included involvement in the development of a ‘Professional Code of Conduct for the Accounting Profession’, which was subsequently adopted nationally and internationally. Mr Hays was also an inaugural member of the Accounting Standards Review Board on which he served for nine years.

New Years Honours

To be a Companion of the New Zealand Order of Merit (CNZM):

101 Series of Educational Articles

Two new articles have been released from our educational series, aimed at giving an oversight of key investment topics using simple terminology, and easy to understand language. These papers are not intended to be the definitive guide on their given topic, but seek to provide enough of an explanation that readers will be able to understand the overall concepts of each topic.
Diversification and 
Asset Class Correlations
Diversification is an often touted and misunderstood investment principle.

Diversification means splitting funds among a group of investments instead of concentrating funds in a single asset, single asset class, or highly correlated asset classes.

Key Features of Shares
Most investment portfolios of charities have an allocation to shares. A share represents a stake in a company.

A typical share fund includes shares in a wide range of different companies. 


Fund News

Property Fund Acquistion

We are pleased to announce that The Warehouse Limited (TWL) has triggered its option under the current lease for the expansion of its South Island Distribution Centre located in the IZone industrial subdivision - Christchurch. The Executive have been in discussions with TWL for some time regarding this expansion that will see the use of the vacant site adjoining the current property.  Works are expected to commence early in 2016 with the building being completed in early 2017. The mechanism for the development is low risk with TWL providing an agreed return on the land and building cost. The Fund is holding funds for the works.​


A new 10 year lease will be entered into for the whole property from practical completion of the works in 2017. The new lease will positively contribute to further extending the Fund's weighted average lease term.


We will make further announcements in the coming period once the documentation and terms have been finalised.

Economic Outlook

Since year end, most share markets have fallen 5-10% as investors have become more concerned about the slowdown in China and the continued decline in commodity prices, notably oil which is off a further 10% to $33.


Earnings forecasts have been revised down and investors have become more risk averse.


In the short term, it is clear that slower economic growth will constrain company profits. Furthermore there would seem to be few catalysts for share markets to perform strongly in view of current valuations. From a longer term perspective, however, the lack of inflation is a strong positive for all financial markets and will ensure that monetary and fiscal policies remain stimulatory.


Returns, both in the short and long term, are likely to be considerably lower than those seen in recent years. Investors are encouraged to maintain a balanced asset allocation.

Fund Returns


The Balanced Fund invests in the other five funds, and has a moderate risk profile of approximately 30% Shares, 30% Property and 40% Fixed Interest. While not immune from market volatility, the Fund has a strong focus on the distribution of income and its returns tend to be reasonably stable.


The Fund returned 3.8% in the quarter as share and property gains more than offset currency losses. Fixed interest returns were muted. This demonstrates the benefit of a balanced asset allocation and well-diversified portfolio.


Returns over the next year are likely to be lower than those of recent years in view of lower economic growth, pressure on company profits and less favourable monetary policy conditions. 

Inception Date 01/06/2006


The Fund returned 4.3% for the quarter and continues to generate steady and consistent income.


A recent highlight for the Fund is that The Warehouse Limited has triggered its option under the current lease for the expansion of its South Island Distribution Centre in the IZone industrial subdivision - Christchurch.


Works are expected to commence early this year with completion in early 2017, when a new 10 year lease will be entered into for the whole property. The new lease will extend the Fund's weighted average lease term beyond the current seven years.

Inception Date 01/03/2001


The Fund’s return was 17.0% for the quarter versus the benchmark’s 13.2%. The NZ market performed strongly compared to its global counterparts, to be up 14% for the calendar year.


The market was buoyed by relatively strong economic growth and a further fall in the Official Cash Rate to 2.5%. The strength of the rally surprised given the increase in long term interest rates, the rise in the NZ dollar, and the generally unexciting outlook for company earnings. The Australian market also performed solidly to be up 6.5% for the quarter.


Australian stocks comprise close to 20% of the Fund. The Fund excludes stocks whose major activities involve alcohol, tobacco, armaments, pornography and gambling, and those involved in the production and/or extraction of fossil fuels.

Inception Date 01/12/2002


The Fund returned 2.7% for the quarter versus the benchmark’s 2.8%.The major share markets performed strongly in local currency terms, the US market up 6%, Japan 11% and UK 3%. For unhedged share investors the rise in the NZ dollar, up 7% versus the US dollar, reversed these gains.


The Fund invests in an indexed product which tracks the MSCI World Index. 50% of the Fund’s foreign exchange exposures are hedged to NZ dollars.


For the quarter, the Fund was therefore exposed to 50% of the currency losses arising from the stronger NZ dollar. For the calendar year, however, the Fund benefited from the significant fall in the NZ dollar. 

Inception Date 01/12/2005


The Fund returned 0.0% for the quarter compared to -0.4% for the market. The fourth lowering of the Official Cash Rate in 2015, to 2.5%, supported securities with shorter maturities, but yields on longer maturities rose in line with the trend offshore, resulting in some capital losses.


The Fund is currently targeting a slightly shorter duration than the market, 3.8 years versus the benchmark's 4.5 years. This strategy is based on the risk that global bond yields rebound from current levels, and that better opportunities will arise to lock in higher rates.


The Fund’s strategy places a high priority on the level and stability of income. It is expected that the proportion of the Fund’s return that is distributed as income will be higher than in previous years.  

Inception Date 01/09/2005


The Fund returned 0.7% for the quarter as sovereign yields rose slightly, generating some capital losses. The Citigroup World Government Bond Index NZ Dollar Hedged returned 0.8%. Bond markets were underpinned by signs of slower economic growth and further falls in commodity prices.


The Fund invests in an index fund that tracks the Citigroup Index hedged to Australian dollars. A further hedge is then applied to eliminate the Australian dollar exposure. The returns tend to lag the benchmark slightly as the cost of hedging is excluded from the benchmark return calculation.

Inception Date 01/09/2005