✨ Financial Statements
Otago Community Trust
Notes to the financial statements
For the year ended 31 March 2013
in New Zealand Dollars ($000’s)
18 Financial instruments (continued)
Trustees regard risk as the likelihood that the Trust fails to achieve these objectives and have adopted a series of strategies to mitigate all risks. The principle strategies include:
- ensuring the Fund is well diversified;
- maintaining an appropriate level of liquidity;
- avoiding purely speculative investments;
- retaining an investment consultant for investment advice;
- using only fund managers which are researched and recommended by the investment consultant;
- maintaining adequate reserves;
- regularly reviewing investment performance.
Credit Risk
Credit risk represents the risk that a counter-party to a financial asset fails to discharge an obligation which will cause the Trust to incur a financial loss. The current exposure at balance date is the fair value of these assets as disclosed in the Statement of Financial Position. Concentrations of risk arise when a number of financial instruments or contracts are entered into with the same counter-party or where a number of counterparties are engaged in similar business activities, geographic regions or similar economic features that would influence their ability to meet their contractual obligations by reason of changes in economic, political or other considerations.
The Trust manages credit concentration risks through:
- a diversified and non-correlated basket of investments across traditional and alternative asset classes
- ensuring compliance with the mandate requirements of each fund manager
The credit quality of the Trust’s New Zealand and global fixed interest portfolios is managed using the Standard and Poors rating categories. In addition, exposure to global bonds is fully hedged against foreign currency movements. The following is an analysis of the Trust’s fixed interest portfolios, based on information supplied by the Fixed Interest managers.
| Analysis of Fixed Interest Portfolios |
|---|
| Credit Rating |
| --------------- |
| AAA |
| AA |
| A |
| BBB |
| Other |
| Totals |
| Sector Rating |
|---|
| Government |
| Corporates |
| Mortgages |
| Swaps |
| Other |
| Totals |
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NZ Gazette 2013, No 98
✨ LLM interpretation of page content
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Otago Community Trust Financial Statements
(continued from previous page)
🏢 State Enterprises & InsuranceFinancial statements, Financial instruments, Credit risk, Investment management, Fixed interest portfolios