✨ Trust Investment Portfolio
NEW ZEALAND GAZETTE, No. 72
27 JUNE 2012
EASTERN AND CENTRAL COMMUNITY TRUST INC
Liquidity Risk
Liquidity risk is the risk that the Trust will encounter difficulties in meeting the obligations associated with its financial liabilities. This risk is managed through the Trust’s investment in a diversified portfolio of financial assets.
The Trust’s investment portfolio during the year under review consisted of only listed securities which under normal market conditions are readily convertible to cash. In addition the Trust maintains sufficient cash and cash equivalents to meet normal operating requirements, as well as the timing of the commitments below.
At balance date all trade and other payables were current, and are normally settled on the 20th of the month following invoice date.
Committed but unpaid donations are held as current liabilities pending the satisfaction of conditions under which the donations were made. At balance date committed but unpaid donations totalled $1,477,190 (2011: $1,318,130).
These committed and unpaid donations at 31st March 2012 had the following profile:
| Financial Year Approved | Number of Grants Outstanding | Value $ |
|---|---|---|
| 2011 | 16 | 193,490 |
| 2012 | 97 | 1,283,700 |
| Total | 113 | 1,477,190 |
Committed but unpaid donations at 31st March 2011 had the following profile:
| Financial Year Approved | Number of Grants Outstanding | Value $ |
|---|---|---|
| 2010 | 6 | 415,500 |
| 2011 | 107 | 902,630 |
| Total | 113 | 1,318,130 |
Market Risk
Market risk embodies the potential for both loss and gains and includes currency risk, interest risk and price risk.
The Trust’s investment strategy and the management of the investment risk are detailed in the SIPO. The Trust’s investments are diversified across a range of assets including New Zealand and Overseas equities, New Zealand bonds, New Zealand and Australian property and cash. Within each asset class there are defined policies and mandates to ensure diversification, to minimise investment risk and to limit exposure to any one investment. Each asset class has a defined target allocation and is managed within a defined allocation range.
In addition, the Trust has a Risk Management Policy which includes a Tactical Asset Allocation Policy. This policy is to identify times when the Trustees should instigate a process to review the short term investment strategy of the Trust.
a) Currency Risk
Currency risk is the risk that the fair value of, or future cash flows from, financial assets will fluctuate due to changes in foreign exchange rates. The Trust has exposure to currency risk through its investments in offshore equities. The strategic investment policy requires full hedging of currency risk for overseas bonds, when held, and 50% hedging, on average, of currency risk for overseas equities. When exchange rates are at extreme levels (e.g. plus or minus more than 2 standard deviations from the long term average) the percentage of hedging is varied as determined by the Trust’s currency policy (e.g. raised up to 100% or decreased down to 0%). Currency hedging on overseas equities has been reduced marginally through the year. Hedging decisions have been constantly reviewed. Currency risk is self managed with the Bank of New Zealand with a range of tolerance.
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NZ Gazette 2012, No 72
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Eastern and Central Community Trust Investment Portfolio
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💰 Finance & RevenueInvestment Portfolio, Asset Allocation, Performance Measurement, Trust Management