✨ Financial Statements Continuation
Notes to the financial statements (continued)
in New Zealand Dollars ($000's)
13 Financial instruments (continued)
Capital management
The Trust’s funds includes trust capital, grants maintenance reserve and inflation & population growth reserve.
The Trust’s policy is to maintain a strong capital base so as to maintain investor confidence and to sustain future development of the Trust.
The Trust is not subject to any externally imposed capital requirements.
The Trust’s policies in respect of capital management and allocation are reviewed regularly by the Board of Trustees, and during the year a decision was taken not to rebalance the investment portfolio while implementation decisions were being considered.
Sensitivity analysis
Table 1 shows the asset allocation for the Trust’s portfolio as at 31 March 2011 as well as the long term expected return for each asset class. The return one standard deviation above and below the expected return is also shown.
Table 1: Sensitivity analysis for the Trust’s portfolio 31 March 2011
| Asset class | Asset allocation
| (31 March 2011) | Long term expected
| return p.a. | -1 Std deviation
| return p.a. | +1 Std deviation
| return p.a. |
|-------------------|-------------------------------|------------------|---------------------------|----------------------|-------------------------|
| NZ equities | | 5.3% | 8.5% | -9.0% | 26.0% |
| Global equities | | 31.5% | 9.1% | -6.4% | 24.6% |
| Global bonds | | 48.9% | 6.5% | -3.5% | 9.5% |
| NZ cash | | 10.6% | 5.1% | -3.1% | 7.1% |
| Global property | | 3.7% | 8.6% | -12.4% | 29.5% |
| Hedge funds | | 0.0% | 0% | 0% | 0% |
| Total | | 100.00% | 7.4% | 0.6% | 14.1% |
From table 1 the long term expected return for the Trust’s portfolio is 7.4% per annum and there is approximately a 68% probability that the return in any one year will be within the range of 0.6% and 14.1%
As at 31 March 2011 the Trust’s portfolio had NZ$143m under management. Assuming the short term return distribution approximates the long term return distribution there is approximately a 68% probability that the Trust’s revenue from investment activities will lie in the range of $0.9m to $20.1m, with an expected revenue of $10.5m for the year 1 April 2011 to 31 March 2012.
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NZ Gazette 2011, No 104
✨ LLM interpretation of page content
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BayTrust Financial Statements
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🏢 State Enterprises & InsuranceFinancial Instruments, Capital Management, Sensitivity Analysis, Investment Portfolio, Returns