The commentary below provides further detail and insight into the Fund returns.

The Fund returns below show the returns compared to benchmark for the composite of the Trust Investments Group Investment Funds to 31 March 2020 and the Trust Management PIE Funds from 1 April 2020.

For more information on the Funds, please view the PDS and Quarterly Fund Updates


The Balanced Fund invests in the other five sector funds.  It maintains a moderate risk profile with a well-diversified target asset allocation of 30% Fixed Interest, 38% Shares and 32% Property.  The Fund has a strong focus on the distribution of income with moderate levels of investment risk. 

The Balanced Fund returned 1.8% for the three months to December 2021, and a strong 9.2% for the 12 month period.  On a rolling 5 year basis, the Fund has delivered an annualised return of 10.2% per annum. 

Global share markets performed well in the final three months of the year, with the MSCI World Index (in local currencies) advancing 8.2%, led by strong returns from US shares.  Despite the New Zealand share market having a strong final run in December, the local index significantly lagged its offshore markets for the December quarter and the year.

Bond markets delivered mixed performances in the final three months of 2021.  Although New Zealand bonds experienced a late year rally, the domestic bond market posted a sizable decline of -5.7% in 2021 as markets aggressively priced in Reserve Bank tightening.  Global bond markets meanwhile were little changed for the quarterly period but saw a small decline for the year. 

The listed property sector performed similarly to the broader NZ equity market in 2021.  Directly held commercial property investments outperformed the listed property sector. 

From an outlook perspective, ongoing pandemic disruption uncertainty along with the global transition away from ultra-low interest rate settings is likely to remain a feature of markets for the foreseeable future. 

While global economic growth is likely to slow from high levels, activity is expected to remain above trend, supporting company earnings and sentiment towards shares.  Returns from bonds are likely to remain under pressure, although yields are now significantly more attractive compared with a year earlier.  The strong capital growth experienced with commercial property in recent years is expected to slow with higher discount rates cooling the market.  Capital gains will be more property sector specific, particularly assets with attractive income characteristics.

Financial markets remain susceptible to both positive and negative surprises and volatility could re-emerge.  We continue to recommend a well-balanced, high-quality portfolio, with a focus on sustainable income.

For the purposes of this report, the performance of the Balanced Fund is compared against the benchmark returns of the underlying funds, and in the case of the Property Fund against the NZX 90 Day Bank Bill Index + 2.5%.

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The Property Fund posted a solid gain of 2.3% for the three months to 31 December 2021, to give a return of 15.5% for the twelve month period (gross of fees).

In December the Fund completed the purchase of a modern industrial property located in the popular Auckland industrial area of Wiri.  The tenant is Nick Scali (furniture retailer) with the property being utilised as its Auckland distribution centre.  The lease is guaranteed by the Australian parent company which is listed on the ASX.  The lease commenced from when the building was constructed in 2019 and is for an initial term of 10 years.  There is fixed rental increases of 2.5% per annum.  The purchase price was $22.7m with an initial income yield of 3.7%. 

While the Covid Alert Level restrictions have impacted tenants, there is benefit of having been through this in 2020.  The Manager had already established a “fair proportion” of rental relief with tenants and therefore was able to move quickly to provide support.  There has been a considerable level of communication with tenants over this period.

The level of rental relief has not been high in the portfolio due to high level of exposure to supermarkets and warehousing/industrial property – these sectors have a combined weighting of 67% of the portfolio value.  These property sectors have performed well due to Covid.

The geographical diversification is another element that has reflected the resilience of the portfolio with nearly 50% of the portfolio being located outside of Auckland.  The defensive nature of quality assets and tenants continues to position the Fund well, even more so with the back drop of Covid.

For the purposes of this analysis, the performance of the Fund is compared against the returns of the NZX 90 Day Bank Bill Index +2.5%.

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The Fund posted a return of-2.1% for the three months to December 2021, to give a return of -5.7% for the 12 month period. 

New Zealand bonds have delivered negative returns the past twelve months as bond yields have adjusted upwards in line with the prospect of higher interest rates in the future.  Government bonds have tended to underperform corporate bonds given their longer durations and lower yields. 

Among economic news, strong domestic data releases during the quarter included the stronger-than-expected inflation data of 2.2% for the September quarter, which took the annual rate of inflation to 4.9%, the highest level since 2011.  Additionally, the unemployment rate fell to a record-equaling low of 3.4%, while manufacturing data stepped further into expansion.  Conversely, New Zealand’s GDP fell by 3.7% in the September quarter as a result of lockdowns and other restrictions on activity; slightly less than the average market forecast.  Retail spending, business expectations and services data also eased.

The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) twice during the quarter, from 0.25% to 0.75%, as expected.  At the end of the year, financial markets were pricing in almost six hikes in the OCR in 2022 taking it to 2.25%. 

At the end of December, the Fund was positioned with a higher than market exposure to longer dated bonds and to instruments issued by corporate entities.  This positioning has enabled the Fund to access higher yields on offer to maximize income, and reflects that the Manager believes that the market is over estimating the potential for the extent of future increases in the official cash rate. +

The Fund is currently actively managed by Nikko Asset Management.  The Fund’s benchmark index is the Bloomberg NZBond Composite 0+ Index.

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The Fund posted a flat return of 0.1% for the three months to December 2021, and -1.5% for the 12 month period. 

Inflation was the main topic dominating market discussion during the first half of the quarter as global inflation data surprised to the upside.  In particular, US inflation rose to levels not seen in 40 years with a headline increase of 6.8% year-on-year, while UK inflation surged to 5.1% year-on-year. Central Banks globally began to signal interest rate hikes to curb broadening inflationary pressures, which contributed to bond market volatility.

Long term bond yields fell late in the quarter as markets were rattled by the discovery of a new Covid variant.  This led investors to flee for the safety of government bonds and reduce their expectations for the pace of future rate hikes from central banks. 

In the US, positive data releases included a larger than expected fall in the unemployment rate from 4.8% to 4.6% along with robust wage growth, as well as strong retail sales and industrial production data.

The Fund currently invests in the BlackRock iShares ESG Global Bond Index Fund, an Australian domiciled unit trust managed by BlackRock Investment Management (Australia) Limited,  The Fund’s benchmark index is the Bloomberg Barclays Global Aggregate Index (NZD Hedged).   The Fund follows an index investment style. 

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The Fund posted a small negative return of -0.8% for the three months to December 2021, to give an annual return of 8.8% for the year, strongly outperforming the flat market index return of 1.7% for the 12-month period. 

The increase in interest rates throughout the course of 2021 weighed on the valuation of New Zealand “structural growth” and high yield stocks, with the domestic market being more exposed to these sectors than global markets.

The Fund has performed well in 2021 in both absolute terms and relative to the performance of the benchmark index.  Focusing on the December quarter period, investments in growth companies which delivered earnings upgrades including Vulcan Steel, Ebos, Charter Hall, Macquarie Group and Goodman Group, were the main contributors to the outperformance of the strategy. The Fund continues to be overweight the healthcare, technology, and consumer staples sectors relative to the benchmark index.

The Fund is currently actively managed by Harbour Asset Management. The Fund’s benchmark is the S&P/NZX 50 Portfolio Index.

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The Fund performed strongly, gaining 8.2% for the three months to December 2021, and 26.1% for the 12 month period. 

Global share markets, as measured by the MSCI World Index (in local currencies), rose 8.2% for the final quarter of 2021. Strong company earnings reports had equities up at the beginning of the quarter, however a combination of pandemic related headlines, along with the likely upward trajectory of interest rates following strong inflation data, temporarily put an end to the winning streak later in the quarter.

Regionally, the US and French share markets were amongst the strongest performers, rising 10.7% and 9.7% respectively.  The Asian share markets underperformed, with Hong Kong and Japanese share markets falling 4.8% and 2.2% respectively. 

Small caps also underperformed large caps over the quarter as uncertainties about future growth weighed on their performance.  Emerging market equities underperformed their developed market peers, continuing a recent theme.

The US company earnings reporting season provided solid results once again, helping to support market sentiment.  According to Bloomberg data, around 82% of US S&P500 companies beat analyst earnings expectations for the latest reporting period.

The Fund currently invests in the State Street Climate ESG International Equity Fund, an Australian domiciled unit trust managed by State Street Global Advisors.  The Fund’s benchmark index is the MSCI World ex Australia (50% hedged to NZD).  The Fund follows an index investment style. 

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Returns are gross of management fees and expenses, and are annualised for periods of longer than one year. Past performance is not indicative of future performance and is not guaranteed by Trust Investments Management Limited, the Supervisor, or the underlying Investment Managers. For further information please refer to the Product Disclosure Statement and Quarterly Fund Updates at, further information can also be found at, under offer number OFR12861. Performance calculations for the Funds comprise the returns of the Trust Investments Group Investment Funds up to and including 31 March 2020 and for the Trust Management PIE Funds from 1 April 2020.


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 here.