New Year Update


Happy New Year!

In late December, we reflected on the 2016 year that had been. Now we look forward to the year ahead. 


Investment markets will surely be interesting in 2017, the huge uncertainty of what lies ahead suggests that balanced investment portfolios will be central to risk mitigation.

Health and Safety will remain a core focus for 2017, as property owners and business operators come to grips with their responsibilities and implement their health and safety systems. 


The New Year also brings a new location for Trust Management, with our move to Level 4, 123 Carlton Gore Road, at the end of March. The new premises will house our growing staff, as we meet the ever increasing demands of our clients.

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


On the property front, we continue to 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.

On a final note, we are looking forward to working with our clients in 2017 to assist the Trustees in achieving the important purposes of each of their Trusts.

Trust Management News

Archbishop Brown (1924-2017)

The Most Reverend Brown Turei sadly passed away on 9 January 2017, aged 92. Archbishop Brown had served in the Anglican Church since he was 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.


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 was widely regarded as one of the pre-eminent leaders of Māori both within the church and beyond, and highly respected for his ability to relate to people across all races and cultures.

We at Trust Management were blessed with working with Archbishop Brown during his long trusteeship of the St John’s College Trust Board and the Te Aute Trust Board and his foresight and wisdom will be missed by us and his fellow Trustees

New Year's Honours

We would like to take this opportunity to congratulate Derek Firth on becoming an Officer of the New Zealand Order of Merit (ONZM).


For services to arbitration and education

Mr Derek Firth has been President of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ) and serves on various AMINZ Panels and Committees.

Mr Firth has represented New Zealand on the ICC International Court of Arbitration and is appointed to assess various cases by the World Bank. He is the former Chairman of the New Zealand National Committee of the International Court of Arbitration. For a number of years he has been named as one of New Zealand’s top five arbitrators by the National Business Review.


He is the immediate past Chair of Dilworth Trust Board and served as a Trustee from 1975 to 2015. During his time as Chair he appointed the current Principal of Dilworth School and has overseen significant improvement of education outcomes, particularly among Māori and Pacific children, and a strengthening of the endowment used to fully fund the 640 students.


Mr Firth has served the wider community as a Board member of the Melanesian Mission Trust Board, H.E Fairey Trust for Disabled Children, New Zealand Special Air Service Trust, Chinese Language Foundation, the Confucius Institute of New Zealand, and as Chair of Kristin School (New Zealand’s largest independent coeducational school).


Fund News

Balanced Fund Asset Allocation Change

The Balanced Fund is a well-diversified portfolio designed to provide consistent returns in most market conditions. It invests in five sector funds, maintaining a moderate risk profile with a strategic asset allocation split across Fixed Interest, Shares and Property. 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.

Due to significant changes to investment market conditions, the asset allocation of the Fund was changed on 22 December 2016. The target weighting to International Bonds was reduced to 10%  (previously was 20%) offset by higher allocations to NZ Bonds (25% up from 18%) and Australasian Shares (15% up from 12%).

To read more about the changes to the asset allocation and the reason for them, please click on the below link.

Fund Returns


The Balanced Fund invests in the other five sector funds, maintaining a moderate risk profile with a strategic asset allocation of approximately 35% Fixed Interest, 35% Shares and 30% Property. 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’s return for the December quarter was 1.0%, with solid gains from International Shares and Property offsetting losses on Australasian Shares and (NZ and International) Bonds. The disparity of the returns highlights the benefit of good diversification. The Fund’s return for 2016 was 8.3%.

​The Fund offers a well-diversified portfolio which continues to provide consistent returns in most market conditions. Returns from here are likely to be lower than those of recent years given modest economic growth rates and increases in company earnings, the uncertain political environment and less favourable monetary policy settings.

To 31 December 2016

Inception Date 01/06/2006


The Fund returned 4.6% for the December quarter, buoyed by asset valuation increases. The valuation increases reflected a period of high activity for the Fund, highlighted by three major developments.

Early in the quarter the Fund settled on a new ground lease on a property that is leased to a listed property fund and sublet for use as a Countdown supermarket site. The lease has a remaining term of 73 years. The property was purchased on a 5% yield with the next rental review due in 2019.

The Fund recently leased a substantial portion of the Pumpkin Patch premises to Maori Television Services on a new 15-year term.

Significant progress has been made on The Warehouse South Island Distribution Centre building expansion in Rolleston. The building extension is due to be completed in March 2017.  

The Fund continues to generate solid and consistent returns. There is a strong emphasis on the regular distribution of income via quarterly distributions.

To 31 December 2016

Inception Date 01/03/2001


The Fund returned -4.1% for the December quarter, compared to the benchmark’s -6.1%, to give a calendar year return of 7.7% (benchmark 7.7%).

Despite a rally in the world’s major share markets, the NZ market weakened in the face of a big increase in long-term interest rates and significant profit-taking after the strong surge in the September quarter.


The Australian market did rather better in the quarter (up 4%) to closely match the performance of the NZ market for the calendar year.   


​Current economic trends and monetary policy settings are expected to provide support for growth assets. However returns could become more volatile if interest rates continue to rise.

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 31 December 2016

Inception Date 01/12/2002


The Fund returned 5.8% for the December quarter, matching the benchmark. The world’s major share markets rallied strongly following Donald Trump’s US election victory in early November. Market sentiment turned positive as expectations of higher economic growth and company earnings gathered momentum. A decline in the NZ dollar boosted returns slightly.


​For the calendar year, the Fund returned 8.0%. Solid gains in local currency terms (except Japan which was flat for the year as a whole) were partly offset by the appreciation of the NZ Dollar.

​Market risks appear evenly balanced. An expected recovery in economic growth and corporate earnings needs to be offset against the probability of tighter monetary policies, higher long-term interest rates and policy uncertainties. Valuations appear reasonable in relation to historical norms.

The Fund invests in an indexed product that excludes companies involved in the manufacture of tobacco and controversial weapons. This product tracks the MSCI World ex-Australia Index excluding these sectors of the market. The Fund’s foreign exchange exposures are 50% hedged to NZ Dollars.

To 31 December 2016

Inception Date 01/12/2005


The Fund returned -2.1% for the December quarter compared to -3.4% for the benchmark, to give a calendar year return of 4.2% (benchmark 3.4%).

Long-term yields rose sharply over the three months, resulting in significant losses in capital value. The yield on the Government Stock 2027 maturity closed at 3.33%, up from 2.27% in September. The lift in yields was reasonably consistent with the rebound in yields in the US and Australia.

​The Fund has been defensively positioned for some time with a duration profile around a year shorter than the market benchmark. This reduced the extent of the Fund’s capital gains in early 2016 but has limited recent capital losses. The strategy is based on the view that yields eventually settle at higher than current levels and offer better investment opportunities in the future.

​The Fund’s strategy prioritises the level and stability of distributed income.

To 31 December 2016

Inception Date 01/09/2005


The Fund returned -2.5% for the quarter compared to -2.4% for the benchmark. The Fund’s return for the calendar year was 5.2% (benchmark 5.6%).

The period saw some large losses in capital value resulting from a sharp lift in long-term sovereign yields. The increase in yields, at least in the US, more than reversed the decline over the previous nine months.

​The rebound in yields was largely due to an increase in inflation expectations in the US prompted by anticipated expansionary fiscal policy (lower taxes, higher infrastructure spending), a tighter labour market and higher commodity prices (the oil price rose 45% in 2016).

While low inflation in Europe and Japan, high debt levels in many countries and an uncertain geopolitical environment will limit the rise in yields, it seems highly likely that central banks will be less accommodating in coming years. On balance our view is that interest rates settle higher than current levels.

​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 New Zealand dollars. Returns tend to lag the benchmark slightly as the cost of hedging is excluded from the benchmark return calculation.

To 31 December 2016

Inception Date 01/09/2005

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.