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 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 a strong +5.4% for the three months to December 2020, continuing its strong recovery from the weakness experienced earlier in the year.  The Fund delivered +10.5% for the 12 month period, while on a rolling 5 year basis, the return was a strong +10.0% per annum. 


Share markets have performed well since March with better-than-expected economic data and extremely accommodative fiscal and monetary policy settings helping to support demand for growth assets such as shares and property.  Bonds have also performed well, responding to falling interest rates as central banks around the world cut interest rates (bond returns and movements in interest rates tend to move in opposite directions).


Returns from growth assets such as shares and property are expected to be supported in the short term  by low interest rates and fiscal spending by governments.  A recovery in business and consumer confidence as a result of vaccines should help to underpin economic data and company earnings expectations. 


Over the medium term however, we expect volatility across financial markets to remain a key feature as uncertainty continues over the outlook for economies and companies.  Portfolio settings that are well-balanced, high-quality, and focussed on the generation of sustainable income are recommended.  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 +4.7% for the three months to 31 December 2020, to give a return of +6.9% for the twelve month period.


During the quarter the Fund contracted to purchase two bulk retail assets at the Tauranga Crossing Lifestyle Centre.  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 purchase is conditional on acceptance of the subdivision Resource Consent terms issued by the Local Authority.  Settlement is then scheduled on the issuing of Titles.  This is expected to all occur in the first quarter of 2021.


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 Fund has a high level of exposure to both the Industrial and Bulk Retail sectors with a Long Term Target Weighting of 60% to these sectors on a combined basis.

Investment inflows have continued to be strong for the Property Fund.  Notwithstanding preparing for the settlement of the Tauranga properties, the Manager is undertaking due diligence on a further quality industrial property for the Property Fund.


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 -1.6% for the three months to 31 December 2020, to give a return of +6.0% for the twelve month period.  Despite the negative returns in the December period, bonds performed well given the fall in long dated fixed interest yields. 


The New Zealand fixed interest sector, as measured by the S&P/ NZX NZ Government Bond Index, fell 2.8% for the three months to December 2020 as long dated bond yields rose. 

The 10-year NZ Government Bond yield hit the 1% mark during the quarter, a level not seen since April 2020.  Corporate bonds meanwhile outperformed government bonds with the S&P/ NZX A-Grade Corporate Bond Index declining a more modest 1.0% for the quarter with most of the outperformance attributable to the lower interest rate duration composition of the corporate index relative to the government index.

The positive economic dataflow in New Zealand saw the market “price out” any further chance that the RBNZ will take the OCR into negative territory while the announcement by the RBNZ of its new Funding for Lending Program further added market weight to the lower likelihood of a negative OCR.  Bond yields moved higher still after the Finance Minister wrote to RBNZ Governor Orr, suggesting that influencing house price inflation could become an added component of the RBNZ’s mandate.

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 three months to December 2020 saw little change in overseas fixed interest yields with the Bloomberg Barclays Global Aggregate Index (NZD Hedged) gaining 0.4% for the quarterly period.

Major developments included the US law makers finally agreeing to a new US$900 billion fiscal package and the UK and EU finally coming to terms on a new post Brexit trade deal.  Amid an acceleration in Covid-19 case numbers, December saw the start of the rollout of vaccines, signalling an end to the pandemic may be in sight. 

Central banks continued to reiterate a willingness to “do whatever it takes” to support economic activity.  The US Federal Reserve (the Fed) for example outlined its intention to continue its significant asset purchase programme until “substantial further progress has been made towards the Feds employment and inflation goals”. 

Following a change in the strategy of the Fund, the Fund now includes exposure to both sovereign bonds and corporate bonds via investment in an indexed fund designed to match the performance of the Bloomberg Barclays Global Aggregate Index, subject to the adoption of certain sustainability criteria.  Returns tend to lag the benchmark slightly as the cost of hedging is excluded from the benchmark return calculation.             

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The Fund posted a strong return of +18.0% for the three months to 31 December 2020, to give an annual return of +24.4% for the year, strongly outperforming the market index return of +16.3% and +14.7% respectively. 

Vaccine trial results, which showed high levels of efficacy, saw a shift in market focus towards cyclical stocks during the quarter on expectations of a quicker end to the pandemic than previously expected.  Within the local market, information technology, materials and consumer discretionary sectors tended to be the strongest performers, whilst energy, healthcare and industrials were underperformers.

Among company specific news, Dunedin based biotechnology company Pacific Edge (+95%) was one of the strongest performers on the local market as it revealed it had hit several key milestones, while Summerset (+41%) and Mainfreight (+49%) benefited from positive earnings updates.  Meanwhile, Meridian and Contact Energy were strong performers, benefitting from global Investor demand for clean energy investments, while an unsolicited takeover offer for Infratil saw its share price increase by 49% over the quarter.  The positive moves were offset by negative moves for a2 Milk, Pushpay, Chorus and Sanford on downgrades in profit expectations. 

The portfolio has performed well this year relative to the negative 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 +8.6% for the three months to December 2020 and +12.5% for the 12 months. 

Share markets moved higher for the December quarter, responding to the roll out of vaccines and generally better-than-expected economic and company earnings data.  The MSCI World index in local currency terms experienced strong gains with November seeing many of the major market indices experience their strongest monthly gains on record. 


Christmas lockdowns in the United Kingdom and ongoing Brexit discussions had little impact on market sentiment with investors more focussed on further fiscal stimulus announced in the US, vaccine rollouts, while an investor friendly US election result further supported demand for shares.  Hopes for an acceleration in economic activity in 2021 helped boost the share prices of cyclical companies with Energy, financials, materials, and industrials companies among the strongest performers as investors “bet” such cyclical companies would be the best positioned to benefit from more “normal” economic conditions.

While the economic and earnings backdrop remains supportive for future share market returns, the strong gains of 2020 have seen investors factor this in, meaning that the year ahead is unlikely to see the same level of returns repeated.

The Fund invests in an indexed product that excludes companies involved in the manufacture of tobacco, controversial weapons or nuclear weapons, along with companies that exhibit poor adherence to international norms in relation to environmental protection, human rights, labour standards and corruption.  The Fund’s sustainability criteria also aims to have a lower exposure than the market index to high carbon emitters.  The Fund’s foreign exchange exposures are 50% hedged to NZ dollars.

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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