Quarter Two


Do you know someone who would be interested in receiving our quarterly newsletters?

Though we are not yet ready to embrace the digital world of Twitter, you can now subscribe online to receive our newsletters.

If you know someone who may be interested, we would be very grateful if you took the time to talk to them, and forward them our email, or subscription link. 

Tell a friend...


Trust Management News

Trust Management Granted MIS Licence

Pursuant to the Financial Markets Conduct Act 2013 all fund managers will be required to be licensed. The licensing process is an in-depth review of the system, people, governance, capabilities and competencies of a Manager. To give some insight into the depth of the licensing process, Trust Management’s application, with supporting papers was over 1000 pages.

On 20 June 2016, Trust Investments Management Limited was granted a market service license by the FMA, as a Manager of Managed Investment Scheme ("MIS license"). We were just the 10th New Zealand Fund Manager to be granted a license at the time. 


For any questions in relation to the licensing process or the impact of the Financial Markets Conduct Act 2013 on the Group Investment Funds, please do not hesitate to contact Shane Coward, General Manager.

Property Business of the Year Award

Trust Management’s Property Team has carried on their success from the RICS awards by winning the Property Business of the Year Award from the Property Institute of New Zealand.

Patrick O'Reilly, General Manager Property, said that the PINZ award shows the growing recognition of Trust Management as a market-leading property asset manager.

The property team manages circa $550m of property on behalf of clients, and a further $110m in the Trust Investments Property Fund.

If you would like to know more about how our Property team can assist you, please contact Patrick O'Reilly, General Manager Property on 550 4056.

Award Winner

Latest Articles

Below we present to new articles from our educational series, aimed at giving an oversight of key 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.
Seven Factors to Consider When Choosing an Active Manager
Many charities appoint an active fund manager to look after their investment portfolio. Active managers research a wide range of shares, bonds and properties, and select those they expect to generate superior returns.
Choosing an Active or Indexed Manager

When choosing a manager, investors can select a manager that makes active investment choices, or one that aims to track an index.

Fund News

Financial Markets Conduct Act

Investment Managers have until 1 December 2016 to comply with the Financial Markets Conduct Act, including licensing as a Manager of a Managed Investment Scheme ("MIS license"), registering their Funds, and registering a Product Disclosure Statement.

​​Trust Management registered its Product Disclosure Statement ("PDS") on 19 July 2016. The PDS replaces the Prospectus and Investment Statement, the terms of the offer remain unchanged. 

The Financial Markets Conduct Act effectively introduces a new regime with more regular updates on the activities of the Funds, which can be found on the Disclose Register, www.business.govt.nz/disclose (OFR10645).

One example of the documents that can be found on the Disclose Register, is the Quarterly Fund Update. These Fund Updates are in a prescribed format as set out in the Financial Markets Conduct Regulations.

Strong Property Revaluations Drive Performance

Trust Investments Property Fund has recorded a strong capital value increase for the first six months of 2016.  The Fund undertakes valuations throughout the year for the properties on a rolling basis so to reflect a market based unit price.  All properties were also valued as at 30 June 2016.


The results for unit holders has been very pleasing.  The portfolio increased by 5.31% ($4.31m) for the first six months of the year.  Increases in asset values were across the portfolio with the ground lease property at Hamilton and The Warehouse freehold property in Christchurch contributing at a higher level to the portfolio increase.


The property portfolio value increased by 9.87% ($8.01m) in the first half of the year, partly due to additional investments.


Patrick O’Reilly, Trust Management’s GM Property noted “ it is positive to see some of the value increase attributed to increasing market rentals rather than yield compression.” 


The portfolio is well positioned for the balance of the year with the building extension to The Warehouse South Island Distribution Centre in Christchurch still on programme for completion in February 2017.

Economic and Market Outlook

The world’s major share markets gained an average 2% in the June quarter, but continued to underperform fixed interest markets. Investors were generally cautious in light of low economic growth, modest increases in company earnings and heightened geopolitical risk. Monetary policies remained highly accommodating amid few signs of inflation pressures. The surprise Brexit vote led to significant market volatility late in the quarter.   

Fixed interest markets generated strong capital gains as long-term interest rates declined yet again, returning close to 3% over the three months while property markets were underpinned by their relatively attractive yield. Foreign currencies swung wildly in June, with the Japanese yen surging while the British Pound suffered its heaviest fall in 30 years.  

New Zealand markets performed creditably. The share market was supported by an appealing dividend yield as the 10-year Government Stock rate declined from 2.9% to 2.3%. The NZ dollar appreciated around 3%, lowering unhedged international share returns. Over the quarter NZ appeared to gain status as a safe haven for investors and a source of relatively attractive investment income.


Easy monetary policies continue to provide a strong tailwind to markets, but risk factors abound. Aside from the aftermath of Brexit, uncertainty surrounds the US presidential election in November, the timing of tightening by the US Federal Reserve, and very high debt levels in China. We reiterate that under almost all scenarios, returns across all asset classes over the next few years are very likely to be lower than those seen recently.


Fund Returns


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

The Fund returned 2.8% in the quarter, mainly on the back of strong fixed interest and property returns, while the performance of global share markets (50% foreign currency hedged) was relatively muted.

The well-diversified portfolio continues to provide consistent returns in most market conditions. Returns from here are expected to be lower than those seen in recent years given sluggish economic growth, modest growth in company earnings and a less favourable monetary policy backdrop.

To 30 June 2016

Inception Date 01/06/2006


The Fund returned 6.0% for the quarter as steady and consistent rental income was complemented by some strong revaluation gains.

The full portfolio had independent registered valuations undertaken as at 30 June. The revaluations were led by the IZone industrial property where a major building expansion is being undertaken.  Adjusting for capital expenditure and new purchases, the Fund’s value increased by 5.3% for the six months to June.

The Fund continues to put a strong emphasis on the distribution of income and makes regular quarterly distributions.

To 30 June 2016

Inception Date 01/03/2001


The Fund returned 2.2% for the quarter versus the benchmark’s 2.1%, to give a strong 21.8% for the June year (benchmark 19.7%). The New Zealand share market continued to perform strongly relative to other markets around the world.

Solid profit results and an attractive dividend yield continued to support the market, helped by a further fall in long-term interest rates. Economic growth of close to 3% and few signs of inflationary pressures have also served to underpin prices.

The Australian market also performed well to be up 4% for the quarter, although the New Zealand dollar rose 6% against the Australian dollar. Australian stocks comprise close to 20% of the Fund.

The Fund has an ethical screen in place whereby stocks whose major activities involve alcohol, tobacco, armaments, pornography and gambling are excluded from the portfolio, along with companies involved in the production and/or extraction of fossil fuels.

To 30 June 2016

Inception Date 01/12/2002


The Fund returned 0.1% for the quarter versus the benchmark’s 0.2%. The world’s major share markets rose an average 2% in local currency terms, but the New Zealand dollar rose sufficiently to reverse those gains.

The US market was up 1.9% over the three months, but many other major markets were impacted by large currency movements, notably Japan, down 7% as the Yen surged, and the UK, up 5% as the Pound plummeted. This demonstrates how portfolio risk may be lowered by holding some unhedged foreign currency exposures. 

Over the 12 months to June, the Fund returned -4.2%. In local currency terms, global share markets were flat over the year, but gains in the NZ Dollar reduced returns for unhedged investors.

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.

To 30 June 2016

Inception Date 01/12/2005


The Fund returned a solid 1.7% for the quarter compared to 2.1% for the benchmark. Long-term yields declined a further 0.6%, making for some large capital gains. Falls in global yields and a firm New Zealand Dollar helped to support the market.

The Fund’s recent underperformance has been on account of its shorter duration than the benchmark, currently 3.5 years versus the benchmark's 4.4 years. This defensive strategy is based on the view that global bond yields eventually increase from their current low levels and offer better investment opportunities in the future.

The Fund’s strategy prioritises the level and stability of distributed income. It is expected that capital gains from here are unlikely so that the proportion of the Fund’s return that is distributed as income will be higher than in recent years.

To 30 June 2016

Inception Date 01/09/2005


The Fund enjoyed another strong quarterly return of 2.9% as long term sovereign yields declined by 0.4% on average, generating further capital gains. Returns for the year to date have been the strongest in fixed interest markets since 1995.

Bond markets prospered on the back of sluggish economic growth, low inflation expectations, heightened risk aversion following the Brexit vote and geopolitical uncertainties. The oil price rose 25% over the quarter, but markets focused more on continued accommodating monetary policies.

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

To 30 June 2016

Inception Date 08/09/2005

Under the Financial Markets Conduct Act this communication may be deemed to be an advertisement for an offer of units. Trust Investments Management Limited is the issuer of the units to be issued under the offer to which this advertisement relates. A product disclosure statement for the offer, which sets out the terms and conditions of the offer, is available, and can be obtained at www.trustmanagement.co.nz/investment-products.