MARCH 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 1.6% for the three months to March 2021, and a strong 18.9% for the 12 month period. On a rolling 5 year basis, the return was a solid +9.9% per annum. 

Financial market performance for the three months to March 2021 was mixed, with bonds and New Zealand shares giving up some of their strong 2020 gains, while offshore share markets marched higher. 

Bond prices fell as yields on long dated bond instruments rose following a string of better-than-expected economic data, leading to speculation that less central bank stimulus would be required in the future.

Within shares, most major share markets around the world experienced strong gains for the three months to March 2021, continuing their strong performances following the pandemic related selloff of March of last year.  In contrast to offshore markets, domestic shares fell over the quarter, albeit with the index still up over 40% on a 12 month basis.  Despite a relatively upbeat company reporting season, the move higher in bond yields, combined with stretched valuations, was the dominant factor on share price performance. 

The combination of a significant drop in infection rates, the vaccine rollout, and continued accommodative policy settings (including a further US$1.9trillion stimulus package in the US) will continue to support an acceleration in global activity.  Company profits are expected to follow suit, rebounding to pre-pandemic levels. The positive outlook however belies the fact that investors have already largely discounted this scenario given the strong market moves in the second half of 2020.  Accordingly, financial markets remain susceptible to both positive and negative surprises and we expect the recent volatility across markets could continue as a feature for some time to come. 

We continue to recommend a well-balanced, high-quality portfolio, with a focus on sustainable income.

For the purposes of this analysis, the performance of the 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 gain of +5.6% for the three months to March 2021, to give a return of +15.0% for the twelve month period.

During the quarter the Manager completed due diligence on a modern high profile industrial property in Wiri, Auckland. The transaction was concluded with the property settling on 7 April 2021.  The property is home to the NZ head office of the international truck company, IVECO and the purchase price was $25.5m.

The two bulk retail assets at the Tauranga Crossing Lifestyle Centre are expected to settle in May 2021.  The properties are anchored by a Gilmours Supermarket (being the trade supermarket for Foodstuffs), as well as a Farmers and Bed Bath & Beyond tenanted premises.

The commercial property sector is experiencing an increased level of demand for industrial and bulk retail assets – properties that are well located as well as those that have long-term leases to quality tenants are being keenly sought after. 

The property portfolio was revalued for financial year-end and the strong market conditions have been reflected in the revaluations, with large positive revaluations being particularly experienced in Auckland-located industrial and bulk retails properties.  On a like for like basis the properties appreciated by an impressive 12% over the last financial year.

The defensive nature of the quality assets and tenants within the Fund 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 -2.6% for the three months to March 2021, to give a return of +0.9% for the twelve month period. 

The New Zealand fixed interest sector, as measured by the Bloomberg NZBond Composite 0+ Year Index, fell 3.0% for the quarter to March 2021. The fall in bond prices was due to the inverse relationship with bond yields, as long dated bond yields rose on the back of greater economic certainty.

After hitting a low of 0.43% in September 2020, the 10-year NZ Government bond yield rose from 0.99% at the end of December 2020 to 1.90% at the end of February, then fell to end the quarter at 1.74%. Government announcements in March aimed at discouraging speculative activity in the residential property market, pushed out expectations of any official cash rate (OCR) increases, contributing to lower bond yields and a weaker NZ dollar towards the end of the quarter.

Corporate bonds outperformed government bonds with the Bloomberg NZBond Credit 0+ Year Index declining a more modest 1.3% for the quarter. Most of this outperformance was attributable to the lower interest rate duration composition, along with higher interest rates for the corporate index relative to the composite index.

Domestic economic news during the quarter was focussed on the continued surge in house prices, with annual NZ house price inflation hitting 21% in February. Real NZ GDP for the December quarter was slightly disappointing; however economist largely discounted the data given current uncertainties on measuring the economy. In the Reserve Bank of New Zealand’s Monetary Policy Statement in February, the Bank acknowledged a number of positive developments, but noted the outlook remained highly uncertain and therefore kept its policy settings unchanged.

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.  As at the end of March, the duration of the fund was 4.7 years versus the market at 5.0 years.

With bond yields still sitting at very low levels, there is a risk of capital loss over the medium term as bond markets eventually transition to a higher growth environment.

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The Fund posted a return of -2.6% for the three months to March 2021, and -1.0% for the twelve month period. 

The Bloomberg Barclays Global Aggregate Index (NZD Hedged) fell 2.5% in the March quarter period as global fixed interest bond yields moved higher. In particular, the US 10-year rate surged from 0.91% to end the quarter at a 14-month high of 1.74%.

The stronger outlook for economic growth, enabled by low interest rates, simulative fiscal policy (including President Biden’s $US1.9 trillion fiscal stimulus package aimed at turbocharging the economy), and the vaccination programme roll out, all contributed to a movement higher in long term interest rates over the quarter.

Central banks have been relaxed about recent bond yield increases as it reflects a stronger growth and inflation outlook. However, policy makers remain committed to holding cash rates at historic lows for the foreseeable future, despite rising inflation expectations.

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The Fund posted a negative return of -2.9% for the first quarter of 2021, to give an annual return of +50.8% for the year, strongly outperforming the market index return of +40.1% for the 12-month period. 

The New Zealand share market as measured by the NZX Portfolio Gross Index fell 2.7% for the March 2021 quarter, as very strong company earnings results were balanced by the prospect of higher interest rates.  This contrasted with most other markets, for instance the Australian market was up 4.3% (6.0% in NZD). Companies benefitting from economy’s re-opening, alongside cyclical companies were the key outperformers for the quarter, while growth companies generally lagged after a strong 2020. 

The domestic share market was hurt by rising bond yields during January and February, given its higher exposure to the interest rate sensitive utilities and real estate. Contact Energy (-19%) and Mercury Energy (-26%), as well as consumer staples company A2 Milk (-29%), were amongst the weakest performers for the quarter. In contrast financials such as Westpac (+29%) and technology companies such as Vista Group (+31%) were strong.

Among company specific news, meal company provider, My Food Bag, listed, with the opening coinciding with a more general market decline. The share price finished the quarter down 8.0% from the listing price, with retail investors disappointed in the IPO momentum.

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.

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The Fund performed strongly, gaining +6.6% for the three months to March 2021, and +40.4% for the 12 months. 

The global reflation theme (improving global growth and corporate profits), drove most global share markets higher during the first quarter of 2021, with the MSCI World Index (in local currencies) rising 6.3%.

Regionally, European markets were amongst the strongest performing for the quarter. In particular France rose 9.6% and Germany was up 9.4%.  The US share market as measured by the S&P500 Index rose 6.2% to a fresh record high.

From a sector perspective, the reflation trade saw investors rotate out of growth stocks and into less defensive, more cyclical stocks such as energy, financials and airline companies, along with smaller capitalisation stocks. Shares in utility and consumer staples companies were weaker, as well as larger capitalisation companies such as Apple (-8%), Amazon (-5%) and Tesla (-5%)

Ultra accommodative monetary and fiscal policy settings around the world have lifted potential economic growth and inflation. While positive developments in the fight against Covid-19 along with the encouraging rollout of vaccines, particularly in the US and UK, also supported market sentiment.

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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