✨ Financial Statements Notes
26 AUGUST 2013 NEW ZEALAND GAZETTE, No. 114 3103
ASB COMMUNITY TRUST
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2013
minimised by ensuring that all investment activities are undertaken in accordance with established mandate limits and the investment strategies set out in the Group’s SIPO.
Interest Rate Risk
Interest Rate Risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial assets. The Group’s investments in global bonds are held in a pooled fund and a segregated account. NZ Bonds are held in a segregated account. As such movements in interest rates will be reflected in the fair value asset pricing of each pooled fund or each underlying bond within the segregated account. The exposure to movement in the fair value of the Group’s bond portfolios is discussed in the note on Price Risk.
The Group’s cheque and call accounts are interest bearing. Any movement in interest rates on these accounts is minimal and is not considered to be material.
Currency Risk
Currency Risk is the risk that the fair value of, or future cash flows from foreign currency denominated financial assets and amounts owing under foreign currency denominated financial liabilities will fluctuate due to changes in foreign currency exchange rates. The Group is exposed to currency risk both directly through investments denominated in a foreign currency and also indirectly where investment funds invest in foreign currency securities. Global Equity Funds and Inflation Hedging Assets are 50% hedged and Hedge Funds are hedged within a range of 50-100%. Global Fixed Interest Investments are 100% hedged. Emerging Markets Equity Funds; Private Equity and Cash are not hedged. All hedging is back to the New Zealand dollar. Liabilities denominated in foreign currencies are fully hedged back to New Zealand dollars at the time that the obligation is entered into.
Implementation of hedging contracts for the investment portfolio follows the month end valuation of the portfolio. Any movements in markets during this period may result in the portfolio being under or over hedged. These are not considered material, and will have minimal impact on the fair value of or future cash flows from the Group’s financial assets.
At balance date the Group’s exposure to currency risk was as follows:
| Group 2013 | Group 2012 | Trust 2013 | Trust 2012 | |
|---|---|---|---|---|
| $000 | $000 | $000 | $000 | |
| Financial assets with | ||||
| currency exposure | 866,227 | 858,936 | 866,227 | 858,936 |
| Hedged currency exposure | (519,217) | (521,952) | (519,217) | (521,952) |
| as at 31 March | ||||
| Unhedged currency | ||||
| exposure at 31 March | 347,010 | 336,984 | 347,010 | 336,984 |
| | Group | | Trust | |
| | 2013 | 2012 | 2013 | 2012 |
| | $000 | $000 | $000 | $000 |
| North America | 211,790 | 232,872 | 211,790 | 232,872 |
| Europe | 60,875 | 56,375 | 60,875 | 56,375 |
| Oceania | 35,322 | 29,082 | 35,322 | 29,082 |
| Asia | 39,023 | 18,655 | 39,023 | 18,655 |
| Unhedged currency | | | | |
| exposure at 31 March | 347,010 | 336,984 | 347,010 | 336,984 |
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NZ Gazette 2013, No 114
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ASB Community Trust Financial Statements Notes
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💰 Finance & RevenuePortfolio Characteristics, Investment Portfolio, Growth Bucket, Diversified Bucket, Inflation Proofing, Deflation Proofing, Credit Risk, Financial Instruments, Counterparty Risk, Risk Management, Credit Risk Ratings, Liquidity Risk, Market Risk, Interest Rate Risk, Currency Risk, Hedging, Financial Assets, Financial Liabilities, Exchange Rates