The manager's conservative lending criteria (the fund applies a maximum of 50% loan to valuation ratio and a maximum loan repayment to gross income ratio of 30% to all mortgages) reduces the potential risk of capital loss for investors. Fund guidelines require that no loan to any borrower can exceed 2% of the portfolio. This fund has a one-year lock-in period.

NZ Funds has combined property and infrastructure assets to provide a comprehensive exposure to physical assets in New Zealand.

These sectors are correlated to similar economic factors and therefore offer similar investment characteristics, i.e. high capital investment and stable revenues. The aim of the trust is to provide an attractive and reliable income stream to investors wanting exposure to the real assets in New Zealand.

With the divestment of much public infrastructure over the past 5 years, the available pool of investment assets has expanded sufficiently to provide a reasonably broad range of investment opportunities from which to diversify across.

Investment decisions are based on an internal valuation process that focuses on calculating an expected long term return for each company with the key inputs being the long-term forecasts of company earnings and cashflows.

These are generated from fundamental research based on an understanding of the industry and the strength of the company within the industry. Companies are then ranked according to their forecast returns, and included in the portfolio when their returns are sufficient to compensate for their level of risk. Final investment decisions depend on shorter-term catalysts such as economic conditions, profit momentum, etc.

The contracted sub-manager, Deutsche Asset Management, believes earnings and cashflow growth determine share price performance over the long term. Deutsche Asset Management manages this fund's assets on a discretionary basis applying an active approach to both country weightings and stock selection.

However, the main emphasis of their research is on bottom up company specific factors, as they believe informational efficiencies are greater at the company specific level. Country weightings are based on top down assessments of relative risk-adjusted returns.

The Tower BondPlus Fund takes a reasonably conservative position toward credit risk. It does this by restricting the portfolio to a minimum investment in A rated or better securities (rated by Standard & Poors) to 75%. Additional exposures outside government and government guaranteed securities are limited to a maximum of 15% of the fund.

Duration strategy is reviewed at the monthly investment committee meetings and is based on a 12 month rolling forecast. The fund has a formal duration investment range of +/- 1.50 years around the index, with the manager allowed discretion of +/- 0.50 years without board approval.

The manager, in addition to duration management, focuses on value addition through yield curve positioning and security selection.

BT Funds Management Limited, a subsidiary of Bankers Trust Australia Limited, is the manager of this fund. The international fixed interest team based in Sydney uses various in-house investment specialists including economists, domestic and international bond managers for research and market information.

BT aims to retain the ability to move quickly and therefore relies on the marketability of securities confining its global bond portfolio investments to the more liquid government bonds, bank bills or other similar international issues. Futures and options are used as an alternative to physical investment, often to hedge downside risk.

The Balanced Fund is the more conservative of the two diversified trusts offered by NZ Funds and is aimed at the medium risk investor.

NZ Funds performs the asset allocation process in conjunction with FundSource, with a focus upon interpreting structural and cyclical economic change, and relative value between asset classes.

The key forums for reviewing and updating asset allocation and sector strategies are the monthly Asset Allocation meeting which, updates strategy in the light of current and forecast market and economic events.

The monthly review incorporates a top-down assessment of short and medium term economic prospects and reviews market expectations and the key risks impacting upon those assumptions.

The final output, the tactical asset allocation strategy, is based on relative value between asset classes (risk adjusted) based on historic norms. Sector strategies are implemented using the feeder fund concept to achieve exposures through NZ Funds range of specialist funds.

In line with the BNZ Financial Service's philosophy, short-term deviations from benchmarks are minimal and are implemented gradually rather than actively.

International bond and equity investments are made through two of BNZ's specialist funds: the BNZ International Bond Trust and the BNZ International Equity Trust. All other security exposures are achieved through direct investment.

The currency exposure of the International Bond Trust must be at least 80% hedged at all times with the remaining 20% at the discretion of the contracted portfolio managers Credit Suisse Asset Management.

Stephen Hong is the account manager who oversees the day to day implementation of decisions made for this fund. The fund has an income/growth benchmark of 65/35; however, it is focused more towards offshore assets, compared to similar type funds, with a domestic/international benchmark of 42.5/57.5.

The primary forum for the development of asset allocation strategies is the quarterly strategy meeting with direction and inputs coming from the domestic sector specialists as well as the Australian asset allocation team.

The basic cornerstone inputs into the process are forecast investment returns and ranges for each sector based on both 3 and 6 month tactical time horizons. In-between times, these forecasts are reviewed and adjusted where appropriate at weekly investment team meetings.

The NZ investment team add a NZ overlay to the international asset allocation decisions to determine under/over weightings vs pre-determined strategic asset class benchmarks.

Specific asset exposures are obtained on a feed-in basis through the following routes: NZ Fixed Interest - (NZ Bond Fund), Internationall Bonds - (BT Private Selection International Bond Fund), International Equities - (BT Private Selection International Equity Fund), NZ Equities - (Direct), Cash - (Direct).

This Award is given to managers that have experienced significant improvement in the way they approach the task of investment management relative to their peers. AXA Funds Management has been going through a process of comprehensively restructuring the management of the various asset classes, moving to outsource some active asset management functions to external specialists.

The main restructuring functions are changes to some of the investment management team, the selling of its Trustee business and a general move to concentrate resources on funds management in New Zealand. As a result of this restructuring, the consistency and the relative level of performance for many of AXA's major fund offerings have considerably improved.