JUNE 2021

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

Returns for 1-year on the Australasian Share Fund and International Share Fund were unusual. The strong returns followed a sharp fall in share prices during February 2020 and March 2020. These returns should be evaluated with caution as they are unlikely to be repeated and should not be considered a guide to expected future performance.

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 35% Fixed Interest, 35% Shares and 30% Property.  The Fund has a strong focus on the distribution of income with moderate levels of investment risk. 

The Fund returned 2.8% for the three months to June 2021, and a strong 14.5% for the 12 month period. On a rolling 5 year basis, the return was a solid 9.9% per annum. 

Financial markets delivered strong performance for the three months ending 30 June 2021.  Global share markets continued their recent strong run, while the New Zealand share market lagged but still delivered a positive return.  Bonds delivered flattish returns for the quarter. 

A combination of the vaccine rollout, the lowering of social restrictions, and accommodative policy settings, should continue to support global economic activity through the remainder of this year.  Company profits are expected to remain strong, exceeding pre-pandemic levels. While positive economic and company profit outlooks are for the most part factored into valuations, sentiment is expected to continue to favour returns from shares and property in the near term, given simulative conditions.  Full valuations will however, keep a lid on further strong gains, and investors should expect more modest returns from here.  We continue to recommend a well-balanced, high-quality portfolio, with a focus on sustainable income.

The benchmark return for the Balanced Fund is a composite index. This is determined by using the benchmark index (or indices) for each asset class and combining them based on each Fund’s benchmark weighting to each asset class for the relevant period.  In the case of the Balanced Fund’s allocation to the Property Fund, this is against the NZX 90 Day Bank Bill Index + 2.5%.

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The Property Fund posted a gain of 1.5% for the three months to June 2021, to give a return of 15.1% for the 12 month period.

It was a busy quarter for the Property Fund with three properties being purchased and settled and three Speciality Retail Unit Title properties being sold and settled.

The Manager completed the settlement of IVECO’s head office industrial property at 168 Roscommon Road for $25.5m, and two Tauranga Crossing Lifestyle Centre properties (anchored by Gilmours Supermarket, Farmers and Bed Bath & Beyond) for $44m. 

Consistent with the Property Fund’s 2021 Strategic Plan, three Specialty Retail Unit Titles property assets located at 255 Broadway, Newmarket were sold with settlement being completed on 30 June.  One of the units was vacant and the sale price was $8.3m.  These sale transactions have reduced the property fund’s Specialty Retail sector weighting to 10% from 13%, bringing the allocation to the sector in line with the long term target asset allocation for the Fund. 

Two major rental reviews were completed during the quarter – a ground lease rental review was concluded with Investore Property for an asset located at 238-246 Great South Rd, with the rental increasing from $383,000pa to $662,500pa (5 yearly review).  A rental review with NZ Bus at 104-140 Neilson St was agreed via arbitration at $852,000pa, up from $757,000 (2 yearly review). 

The defensive nature of quality assets and tenants continues to position the Fund well. The Fund has a strong emphasis on generating regular income for investors with quarterly distributions.

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 0.3% for the three months to June 2021, to give a return of -1.7% for the 12 month period. 

The New Zealand fixed interest sector, as measured by the Bloomberg NZBond Composite 0+ Year Index, rose 0.1% for the quarter to June 2021. The 10-year NZ Government bond yield was relatively range bound during the quarter, starting at 1.81% and ending at 1.77%. Corporate and government bonds performed similarly.

The Reserve Bank of New Zealand’s (RBNZ’s) monetary policy statement in May included an upgrade to activity forecasts, and surprised the market by signaling the Official Cash Rate could start to rise from the second half of 2022. Also in May, the Government’s Budget 2021 announcement delivered a lift in spending on the back of an improved economic outlook. With revenue ahead of expectations, the Government announced spending increases across welfare, education, schools, district health boards, and infrastructure.  The infrastructure spending is likely to put further pressure on the already capacity constrained construction sector, and therefore broader inflation pressures, while the lift in benefit payments is likely to support consumption. 

Other domestic economic news during the quarter included the unemployment rate falling from 4.9% to 4.7% in the March quarter, slightly better than the market expected, and GDP rising 1.6% in the March quarter, much better than the average market forecast of 0.5%. Despite the significant changes to tax treatment of property investors in late March, New Zealand house price data continued to be strong over the quarter, showing monthly rises of 1.9% and 1.8% for April and May respectively.

The Fund is maintaining a duration about 0.3 years shorter than the market (measured by the Bloomberg NZBond Composite 0+ Year Index), while managing the Fund to maximize income.  In early June, the day to day stock selection decision making for the Fund was transitioned to Nikko Asset Management, a specialist fixed interest manager.

The benchmark return for the Trust Management ESG NZ Bond Fund is the Bloomberg NZBond Composite 0+ Year Index.

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The Fund posted a return of 0.9% for the three months to June 2021, and -1.1% for the 12 month period. 

The Bloomberg Barclays Global Aggregate Index (NZD Hedged) rose 1.1% for the three month period, as global fixed interest bond yields fell slightly. In particular, the US 10-year rate fell from 1.74% to 1.47% over the quarter.

Economic performance continues to diverge amongst nations, driven largely by the trajectory of Covid-19 infections. Most developed economies are now in the advanced stages of reopening, with economic data continuing to surprise on the upside. In contrast, activity in Japan and emerging markets outside China is lagging due to a surge in Covid-19 cases.

US economic data releases over the quarter included the highest annual inflation print since 1996, and manufacturing and services activity both reaching their highest levels on record. The Fed then delivered a more hawkish outlook than expected, bringing forward the timing of expected rate hikes to 2023, however noting a high degree of uncertainty embedded in the projections. This caused a significant, but short-lived, fall in asset prices across commodities, equities and bonds.

In Europe, manufacturing activity remained at historically high levels, while services activity started to rebound as the vaccination rollout sped up and Covid-related social restrictions were eased.

The benchmark return for the Trust Management ESG International Bond Fund is the Bloomberg Barclays Global Aggregate Index (100% hedged to NZ dollars).

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The Fund posted a return of 4.3% for the June 2021 quarter, to give an annual return of 30.4% for the year, strongly outperforming the market index return of 23.0% for the 12-month period. 

The New Zealand share market as measured by the NZX Portfolio Gross Index rose 1.7% during the second quarter of 2021, recovering some of the declines from the first quarter. Continued weakness in A2 Milk (-25%) was offset by strength in healthcare stocks such as Arvida Group (+24%), Pacific Edge (+22%) and Oceania Healthcare (+16%). The Australian market was up a strong 8.3% (6.8% in NZD), driven by stocks in the IT (Megaport +66%, Iress +41%) and consumer discretionary (Domino’s Pizza +25%) sectors. The utilities and energy sectors lagged.

Among company specific news, the majority of companies issued positive outlook statements as part of the May company earnings reporting season. In particular, Mainfreight highlighted increasing market share gains as the company expands its global reach in the freight market. My Food Bag highlighted strong margin expansion, a changing customer mix and higher customer retention rates. In Australia, Westpac Group made an about-turn and announced that Westpac New Zealand will remain part of the group for now.

The Fund has performed well this year in both absolute and relative to the performance of the benchmark index.  The Fund continues to be overweight the healthcare, technology, and consumer staples sectors relative to the benchmark index.

The benchmark return for the Trust Management ESG Australasian Share Fund is the S&P/NZX50 Portfolio Index.

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The Fund performed strongly, gaining 8.0% for the three months to June 2021, and 32.5% for the 12 month period. 

Global share markets, as measured by the MSCI World Index (in local currencies), rose 7.6% over the quarter, with gains widespread across regions and sectors. Despite uncertainty over the future path of Fed stimulus and concerns over rising inflation, global data releases remained strong, consistent with an economic recovery and continued vaccine rollout. Market sentiment was broadly positive and many share markets rose to record highs.

Regionally, despite the fragile Covid-19 situations, emerging market shares were amongst the strongest, with the Brazilian share market in particular rising 23.1%. Amongst developed markets, the S&P500 rose 8.6% to an all-time high, while the EuroStoxx 50 Index rose 4.9%. In contrast, Japan’s share market fell 0.5% over the quarter. From a sector perspective, IT stocks (Intuit +28%) as well as real estate companies (Deutsche Wohnen +30%, SEGRO +17%) performed the strongest, while utilities stocks lagged.

Despite the heightened inflation risks, monetary policy remains supportive of continued economic growth, fiscal stimulus in the form of government aid is serving as a growth tailwind, vaccines rollouts are accelerating economic reopening’s, and company earnings are exhibiting above-expected strength.

The benchmark return for the Trust Management ESG International Share Fund is the MSCI World ex Australia Index (50% hedged to NZD).

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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 at