Trust's investments recovering  

 

After a long period of weak performance, the Trust’s investments have turned around in recent months.

 

June 2009

By the end of April investments were worth $835m, up from a low point of $811m in February this year. 

Because investment income funds the Trust’s grants, a decision on the 2009 grants budget has been put on hold until September, allowing investments time to recover.

The Trust has not sold its assets and maintains a conservative, balanced investment spread. Half the investments are in bonds, half in equities. All the funds have been hedged, so effectively all funds are held in New Zealand dollars and are not affected by changes in the exchange rate. 

Trustees and staff have been cheered by this turn-around, but caution remains as markets are fragile and nobody is guaranteeing that the rally is permanent.

Before the grants budget can be set the Trust must be sure that the core assets of the endowment fund are secure, so its real value can keep up with inflation. Otherwise, the real value of the long-term grants budget will also decrease.

Meanwhile, although new grants have been on hold in the first half of the year, the Trust continues making payments on grants committed in previous years.

The Trust holds more than $65m in committed funds for projects that are not yet ready to draw down their grants. This includes building projects that have not yet begun and other projects that have drawn down some, but not all of their grant.

Examples include Auckland’s planned Q Theatre, the Auckland Art Gallery, Te Araroa Walkway Trust, ASB Showgrounds, MOTAT, the Motu Kaikoura Trust, Netball Waitakere and Papatoetoe Sports and Community Trust. 

The Trust was able to commit to these projects in previous years, when it enjoyed strong returns of up to 21%.

The committed grants sit securely on top of the Trust’s reserves and are ready to be paid when the projects are ready.

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