Christmas Office Hours
It has been a busy year, both for our staff and clients, but a very rewarding and enriching year at the same time.
The office will be closing on Monday, 23 December 2019 and reopening on Monday, 6 January 2020.
From 6 January 2020 to 10 January 2020 the office will be open but operating with reduced staffing levels, as we encourage our staff to have a well earned break with family and friends.
We look forward to meeting up with our clients and investors again in the New Year, and we wish you all the best for the festive season.




Trust Management News and Articles

Deforestation Investor

In line with our ethical investment policy and the principle of ‘first do no harm’, Trust Management has lent its voice to an engagement initiative which identifies risk in industries which rely on deforestation.

230 institutional investors representing USD $16.2 trillion in assets under management are calling on companies to take urgent action in light of the devastating fires in the Amazon, which have been fueled in part by the deforestation happening at an alarming rate in Brazil and Bolivia.

The engagement initiative calls for appropriate disclosure of deforestation risk exposure by companies and implementation of  policy towards no deforestation.

Auckland Commercial
Property Update

In October, Steven Dunlop from Savills New Zealand provided Trust Management clients with a review of the commercial property market in Auckland.  Steven is the National Head of Valuation & Advisory Services for Savills so is well placed in providing an expert's outlook on the property market.


Steven provided an informative and interesting presentation on the current market dynamics.  In this low interest rate environment demand for commercial property has continued to strengthen with investors looking for yield.  Commercial property remains well positioned for the future with strong fundamentals being reflected in the main property sectors.

Fund News

Queen Street Retail Purchase for the Property Fund

Trust Investments Property Fund announced on 22 November 2019 the unconditional purchase of 186 Queen Street in Auckland.


Queen Street retail has strengthened in recent years with the addition of premium international brands.  The development of Precinct Properties Commercial Bay, which opens in 2020, will not only increase office space but further anchors the retail offer in the central city.  Inner city living has also contributed to the vibrancy of retailing in the CBD.


The ground floor Unit Title property is leased to Glassons Limited, (Glassons), which is part of the NZX listed Hallensteins Glassons Holdings Ltd group.  A new lease has been entered into with Glassons from August 2019 for 8 years with fixed increases of 2.5% per annum.  As part of the leasing Glassons will be refurbishing the store in the coming period.


The annual net rental is $788,000 with the Property Fund purchasing the property through an open market campaign for $15.75m.  This purchase represents an initial yield of 5%.  The purchase price is supported by independent valuation advice.


With the property purchase the Property Fund will have allocated close to 100% of its available cash funds held for investment.  Settlement date for this property is scheduled for 31 January 2020.

Lease Extended
9 - 13 Sims Road, Auckland
Sims Road.jpg

Earlier this year, Trust Management concluded a lease extension at Sims Road, Auckland on behalf of the Trust Investments Property Fund.  This industrial property has a high profile as it adjoins the entrance to a busy motorway on-ramp in Penrose.


Trust Management negotiated a lease extension of 6 years from December 2019 as well as an increased rental.  The value of the property has increased from December 2018 by 25.87% due largely to the lease extension.  Patrick O'Reilly, General Manager Property said "The lease extension is a great outcome for investors in the Property Fund and gives confirmation from the tenant that the property is well suited for its future occupation."


Fund Returns


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 and its returns tend to be reasonably stable.

The Fund returned 3.1% for the September quarter, with solid contributions from all asset classes. The return for the 12 months to September was 9.5%.

Despite slowing growth rates in most economies, all asset classes performed well on the back of further falls in (both short-term and long-term) interest rates. Continued low inflation and further monetary policy easings underpinned investor confidence. A wide range of geopolitical risks featured during the quarter, notably the ongoing trade tensions between US and China but also uncertainties with Brexit, Hong Kong protests and a possible impeachment of President Trump.    

The investing environment is expected to become more challenging over the next year, with financial markets unlikely to benefit from a further downtrend in interest rates. Lower growth should limit increases in investment income. We anticipate more modest returns across all asset classes from here.  

To 30 September 2019

BF 11.19.png

Inception Date 01/06/2006



The Fund returned 1.8% in the September quarter, to give a return of 10.4% for the 12 months to September, reflecting solid rental income and capital growth in the portfolio.

The Fund’s property portfolio was unchanged in the quarter, following the June quarter purchase of a large industrial land holding at 104-140 Neilson Street, Auckland and the sale of the Harbourside Retail Centre in Porirua (50/50 joint ownership with Rātā Foundation).

Last year a lease extension of eight years was secured from General Distributors (Woolworths) for the supermarket at 1-15 The Avenue, Lynfield, Auckland (50% owned). This increased the asset value by $2.1m. A new higher rental has since been finalised, which has increased the property’s valuation by a further $875,000 to $15.25m (all figures based on 50% ownership).

The properties in the Fund have 100% occupancy and a weighted average lease term of 9.8 years.

The Fund has a strong emphasis on generating regular income for investors with quarterly distributions. The performance of the Fund is compared against the returns of the NZX 90 Day Bank Bill Index +2.5%. Solid revaluation gains have underpinned the returns in recent years.

To 30 September 2019

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Inception Date 01/03/2001

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The NZ share market (S&P/NZX 50 Portfolio Index) rallied 4.6% in the September quarter, to be up 24.0% for the year to date. The Australian market returned 2.4% for the quarter (5.6% in NZ dollar terms).

Both markets rallied as monetary conditions eased and the potential for a US-China trade deal increased. A deterioration in business confidence saw central banks cutting rates and long-term interest rates falling sharply. Defensive, high-yield sectors such as property and infrastructure provided the best returns.

Among the larger companies Fisher and Paykel Healthcare, Spark, Meridian, Contact, Ryman, Summerset and the listed property stocks performed particularly well. a2 Milk gave back gains, while Chorus and Auckland Airport saw price falls. Kathmandu (+46%) led the gains for the market.

This occurred despite a backdrop of one of the worst earnings announcement periods in recent years, which led to multiple downgrades to earnings expectations.

The portfolio performed slightly above its benchmark for the quarter. Positive returns from Kathmandu, Summerset and Spark boosted performance. Strong returns from Australian stocks Afterpay, CSL, Macquarie and Xero also contributed. Negative returns from overweightings in Vista, a2 Milk and Syrah and underweightings in outperformers Sky City (no holding) and Fisher & Paykel Healthcare detracted.

During the quarter the portfolio increased its investment in Infratil, Goodman Group and Ebos, offset by reduced exposure to Contact Energy, a2 Milk and Mainfreight.

We expect more modest returns from here, with triggers for significant capital gains difficult to identify.


To 30 September 2019

ASF 11.19.png

Inception Date 01/12/2002


Most of the major share markets performed reasonably well in the quarter, buoyed by further monetary policy easings. This was despite slowing economic activity and a wide range of political uncertainties such as ongoing US/China trade tensions, Hong Kong protests, UK political turmoil, a possible impeachment of President Trump and drone missile attacks on the Saudi oil system.

The Fund returned 4.7% in the quarter (benchmark 4.8%) to give a return of 5.6% for the 12 months to September (benchmark 5.4%). In local currency terms the US share market (S&P 500 Index) rose 1.2%, and most other large markets generated modest positive returns. The NZ Dollar fell almost 7% against the US Dollar and lost ground against all the major currencies, boosting the return.

With GDP growth rates falling in virtually all economies and recessionary conditions in the manufacturing sector, corporate earnings growth is slowing. Factset reports that for the September quarter, earnings of US (S&P 500) companies were down 2.4%, marking three straight quarters of year-over-year earnings decline. We expect more modest returns for the Fund from here, with triggers for significant gains difficult to identify.

The Fund invests in an indexed product that excludes companies involved in the manufacture of tobacco, controversial weapons or nuclear weapons. Relative to the MSCI World ex-Australia Index, the Fund also targets a 20% improvement in the ESG score as well as a 50% reduction in current and potential carbon emissions. The Fund’s foreign exchange exposures are 50% hedged to NZ dollars.

To 30 September 2019

ISF 11.19.png

Inception Date 01/12/2005


The NZ Fixed Interest market again performed strongly in the September quarter. The benchmark S&P/NZX NZ Government Stock Index rose 2.9% to return 9.6% for the last 12 months. The yield on the 10-year Government Stock (2029) maturity closed the period at 1.09%, down from 2.37% at the beginning of the year, and well under the midpoint of the Reserve Bank’s 1-3% inflation target range.

The fall in NZ’s long-term yields was reasonably consistent with the trend offshore, which was driven by further monetary policy easing in the US and a slew of data showing evidence of slowing economic activity, particularly in Europe. Locally, NZ’s GDP growth of 2.4% for the June year (the slowest rate since 2013), business confidence at an 11-year low, a weak NZIER survey of economists, and an unusually large 0.5% cut in the Official Cash Rate in August all supported the market.

The Fund underperformed its benchmark for the quarter and year, returning 2.6% and 8.6% respectively. This was due to the relatively defensive strategy that has been in place, with the Fund holding higher grade securities and having a maturity profile shorter than the market.        

We believe there is a significant risk of some capital loss for investors from here, given that interest rates across the curve are well under the (actual and expected) inflation rate. However NZ bonds will continue to play an important role in investors' balanced portfolios as a shock absorber to share market volatility. We are maintaining a duration of around one year shorter than the market, while managing the Fund to maximise income.

To 30 September 2019

NZBF 11.19.png

Inception Date 01/09/2005


Global bond markets again rallied strongly in the September quarter, helped by a slew of economic data showing evidence of slowing activity, low inflation and ongoing US-China trade tensions. The major central banks all maintained or reinforced their easy monetary policy stances, with the US Federal Reserve lowering its target rate by 0.5% via two 0.25% moves. 

For the second successive quarter, long-term sovereign bond yields fell by around 0.3% in most markets. The yield on US 10-year Treasuries declined 0.34% to 1.67% and comparable yields in Japan and Germany closed the quarter at -0.58% and -0.23%.

The Fund returned 2.9% for the quarter (benchmark 3.0%), to give a return of 10.6% for the 12 months to September (benchmark 11.1%).

Global inflation remains low. The US Federal Reserve’s favoured measure, the Personal Consumption Expenditure Core Price Index, rose 1.7% for the September year. Over the same period inflation in the Eurozone and Japan was 0.8% and 0.2%, with rates in most other Western economies 1.5-2.0%.  

It is difficult to see value in most bond markets at current yields. In time the long phase of easy monetary policies is expected to come to an end. We expect low returns from this asset class for some time, given that sovereign yields are generally at or well below underlying inflation rates.

The Fund invests in an index fund that invests only in sovereign securities. This product tracks the FTSE World ex-Australia Government Bond Index hedged to Australian dollars. A further hedge is applied to hedge the Fund’s Australian dollar exposure to NZ dollars. Returns tend to lag the benchmark slightly as the cost of hedging is excluded from the benchmark return calculation.            

To 30 September 2019

IBF 11.19.png

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