✨ Financial Investment Portfolio Details
The Investment Portfolio
The Foundation manages its Investment Portfolio in terms of its SIPO. The SIPO is monitored on a regular basis by the Board of Trustees and, as required, amended to reflect international best investment practice. The Portfolio’s strategic asset allocation is reviewed at three yearly intervals. The strategic asset allocation was last reviewed in 2007. Michael Chamberlain and Associates assists both management and Trustees with investment advice and portfolio monitoring.
Portfolio Characteristics
The Foundation is not directly involved with the analysis, sale or purchase of individual asset securities other than bonds and term deposits. Investments are made into either pooled funds or segregated accounts with Fund Managers. The performance of each asset class is measured against an appropriate internationally accepted standard or index for each asset class.
Global Equities:
This portfolio is measured against the MSCI World Index, and is 50% hedged back to New Zealand Dollars.
New Zealand Bonds:
The New Zealand Bond Portfolio is managed in house. The Investment Guidelines provide strict limits on the underlying investment categories, along with credit and duration restrictions. The portfolio is measured against the NZX Government Stock Index.
Cash:
The Cash Portfolio is managed in house. The investment guidelines places limits on the underlying investment categories, along with credit and duration restrictions. The portfolio is measured against the NZX 90 day bank bill index.
The Statement of Investment Policies and Objectives
The Statement of Investment Policies and Objectives sets out the following risks and mitigations:
| Risk | Definition | Foundation’s Management Policies |
|---|---|---|
| Interest rate risk | The risk that the value of a security, particularly a bond, will temporarily decrease in value as a result of a rise in interest rates. | Bonds are generally held to maturity. Such temporary decreases are therefore unrealised. Bond holdings are to the extent practical diversified by maturity date. The cash levels are set to minimise the potential needs to realise a bond to meet distribution needs. |
| Re-investment risk | The risk that interest, or dividends, received from an investment may not be able to be re-invested in such a way that they earn the same rate of return, or more, as the investment that generated them. Also, that at the time an investment matures, interest rates have fallen preventing the capital to be re-invested at the same yield. | Bonds are structured to maximise diversification by duration and minimise the level of investments that mature at any point in time. New investments can be deferred if interest rates are low. |
| Default Risk | The possibility that an issuer of a bond will fail to make a principal and/or interest payment in a timely manner on the due date. | Bond investments are restricted to investment grade or better, or the equivalent. Investments are diversified over a range of companies, industries and maturities. Exposure to any one issuer is limited. |
| Currency Risk | The risk that changes in exchange rates will reduce the value of the assets. | Currency risks from shares are generally hedged, within controlled limits under the currency management policy. |
| Inflation Risk | The risk that inflation increases the size of the requests for distribution. | |
| The risk that a high level of inflation makes unexpected significant demands for capital base increases. | Part of the assets are invested in shares that provide a natural hedge against inflation. The Foundation looks to regularly increase the capital base over time to maintain it in real terms. |
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NZ Gazette 2009, No 133
✨ LLM interpretation of page content
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Financial Statements of Whanganui Community Foundation Incorporated
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💰 Finance & RevenueFinancial Statements, Community Trusts, Whanganui Community Foundation, Accounting Policies, Investment Portfolio, SIPO, Asset Allocation, Risk Management
- Michael Chamberlain, Investment advisor