Quarterly Update – 1st January 2020


We are very pleased to confirm a quarterly distribution rate to investors of 5.10%*. Despite our need to hold cash within the Fund, we are committed to ensuring we produce great returns to our investors. Therefore, again, we are very pleased with this result and appreciate the faith you place in us to continue to do so.

Tobias Taylor

Shock and Orr



Currently, it is very difficult to speak of anything but the low interest rates affecting savers and investors. The Reserve Bank of New Zealand has taken a breather with its September & November announcements and left the Official Cash Rate (OCR) at 1.00%. To be fair, after the hefty movement of 0.50% “south” on 7th August, this is welcomed in most sectors, albeit maybe a surprise.

The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. An OCR is a conventional tool by international standards.[1] However, for many, it is seen as a blunt instrument that has far wider consequences.   This includes directly affecting deposit rates, especially at main street banks.

Banks use domestically raised capital (term deposits) to help fund their lending book. Therefore, “the spread” between their deposit rates and their lending rates is effectively the margin off which they operate. This revenue, as well as transactional fee and service fee revenue, is the primary source of their well published profits.

We therefore rely on competition in order to be able to shop around for better deals. However, as rates remain so low, the main banks are starting to look rather homogenised.

It was widely reported[2] recently, that the Financial Markets Authority (FMA) has found a further decline in interest rates on bank term deposits is causing more savers to consider alternative investments.

The financial watchdog said a survey of 195 term-deposit holders in August suggested 43 per cent were likely to invest less in term deposits because of low interest rates. Of those who were considering changing their investment strategy, a quarter were considering shifting savings in search of better returns.

Certainly, in our organisation, we are seeing a steady increase in queries about deposits as investors search for regular and quality yield. More so than ever, investors and savers are asking questions about quality, liquidity and generally, “what do you do with my money”? I find this heartening as for me, it seems the message is filtering through that yield is important, but quality, management and liquidity are all factors that need to be considered.

Even though there is a search for yield, the preservation of capital is front of mind, as it should be.

The low-interest rate environment is currently forecast to continue, with little real tangible signs of an end any time soon. Investors and savers can no longer wait “for things to get better”. Mainly because the outlook is that it won’t, any time soon.

Like an English tabloid paper perpetual exploration of tacky metaphors, I read[3] with great amusement that the moniker “shock and Orr” is starting to be used. Certainly, Reserve Bank Governor Adrian Orr has ingrained himself in the financial services psyche of New Zealand. In a previous profession, I remember clearly learning of “shock and awe” in military doctrine with the words “overwhelming force from the outset” still engrained in my mind 25 years since. In Mr Orr’s case, this cap certainly fits.

In my opinion, he’s a strong and bold Governor, not only for his large cut of the OCR in August, but also, his continued statements regarding bank conduct and all things economy. I am excited by the fact that we have visible economic leadership in New Zealand. The Reserve Bank Governor should be a “front of office” role. For this, personally, I applaud him.

Therefore, moving forward, we should watch Mr Orr with a deep fascination. He must navigate the country through what is largely uncharted waters. Interest rates are historically low and are forecast to remain so.  The OCR is a blunt instrument and the biggest trick, in his bag of tricks. I wonder how often he dares to play it.

One thing is for sure, this Governor won’t be offended by the term “shock and Orr”. He may even like it…

Tobias Taylor is the CEO of Fund Managers Central Limited, manager and issuer of the Midlands Mortgage Trust. The PDS for the Midlands Mortgage Trust is available at www.midlandsmortgagetrust.co.nz

[1] https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/what-is-the-official-cash-rate
[2] See for example https://www.stuff.co.nz/business/116171480/more-kiwis-looking-at-alternatives-to-term-deposits-says-financial-markets-authority
[3] https://www.interest.co.nz/business/101914/latest-anz-business-outlook-survey-shows-reserve-banks-shock-and-orr-cut-interest

Investment Manager Appointment


Elliott Jackson has joined Midlands Mortgage Trust in the newly created role as Investment Manager with effect 14 October 2019. Elliott’s primary responsibilities are investor front of office services, as well as the growth of the funds managed by Midlands.

Elliott comes to Midlands with over 30 years in financial services in the United Kingdom, Jersey, and New Zealand. More recently, Elliot acted as the regional manager – Hawkes Bay for Pie Funds Management Limited. Elliott was with the Pie team for more than 5 years, including being a part of their office move to Hawke’s Bay.

“I’m very excited about the opportunities that Midlands Mortgage Trust presents, and am looking forward be part of a growth story with a highly motivated team”, says Jackson.

“We’ve been very fortunate to attract a professional of the level of quality of Elliott. Elliot brings recent strong funds growth experience, a professional client-centric ethos and is truly committed to better client outcomes. Elliott also fully appreciates the place that a quality mortgage fund with strong regular yield holds in the current investment landscape. I’m very pleased to announce Elliott’s appointment.” says Midlands Chief Executive, Tobias Taylor.

Quarterly update – 1st October 2019


It’s been a quarter to remember, my first here at Midlands. While the Official Cash Rate declined dramatically to 1.00% on August 7th, I am very pleased to announce that the distribution rate at Midlands will remain at 5.20%* for this last quarter. This is a fantastic result for our investors.

We can maintain our rate, while also equally important to maintain the quality of our loans, through a number of closely managed factors. Also, importantly, because of the tightening on banking lending criteria, we have a large demand for loans in our sector. With carefully managed in areas such as lending ratios and duration of loans, we ensure a regular maturity allowing for distributions. As we hold cash in scheme as well, lower interest rates challenge us as well.

Tobias Taylor









It’s true. You can’t eat relative returns.

If you have money in the bank, no doubt you found it hard to get excited about the Reserve Bank interest rate cuts in May and June, accompanied by the following comment in a Reserve Bank statement that left the door open for further cuts on the back of a softening economy: (post publish note, the OCR was indeed cut 0.50% to 1.00% on 7 August)

“Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives.” [1]

When the official cash rate is cut banks usually respond by passing on reductions to their home loan customers. The problem is, they also reduce what they pay on a range of their savings products, too. For those wanting to generate income from their savings, term deposits with a high street bank may not currently be the most prosperous option.

“The New Zealand Interest rate is at a historic low … If you need to earn more than 3% on your savings in order to survive financially, you will need to be smart about how to save money,” said research and ratings house Canstar. [2]

If you’re looking for a higher return on your investment there are several alternatives available but factors such as your goals, risk tolerance, required yield, quality of assets, duration, liquidity, and total cost to client (TCC) should be considered when constructing an investment base.

An introduction to shares may fill some more conservative investors with a level of trepidation; although some share investments are designed for dividends rather than capital growth, the possibility of secondary market movement could bring fears of unwanted volatility.

In terms of earnings outlooks, Rob Mercer, Forsyth Barr’s head of private wealth research makes a salient point.

“In response to the minimal changes to forecasts over the reporting season, the 2.6 per cent rally in the New Zealand share market [in May] seems difficult to justify,” said Mercer. “We are heading into a low earnings outlook where there is more uncertainty – the market is not pricing either one of those things … The market is definitely overvalued.” [3]

Therefore, the search for consistent yield continues for the retail investor. Fund managers and financial advisers will talk about “relative returns”. A relative return is a measure of the return of an investment portfolio relative to a theoretical reference portfolio or benchmark. However, fund managers can talk all they like about how well they’re doing compared to an index, but if the 90-day bill rate (which is an index that tracks close to OCR[4]) is 1.60%, no one is going to dance for joy because their locked-in term deposits are a percentage or two above that.

There is a saying in finance, especially relevant in a low interest rate environment, that is “you can’t eat relative returns”. Basically, this means that investors ought to be focused on the absolute growth of their money, not on its growth relative to some benchmark.

Whilst rate is important, it should not be at the expense of other sound investment principles (including a proper understanding of risk) and investor goal-related considerations. It’s important to understand how assets are managed, by whom, and whether you can access your funds when you need them. An example of an accessible alternative outside of term deposit and dividend orientated shares is (amongst other assets[5]) mortgage funds.

Pros of mortgage funds:

·        Mortgage funds target capital, with stable, income-based returns from portfolios of loans secured by mortgages

·        Investors usually receive regular income payments

·        Generally offer stable returns

Some points to be aware of:

·        Be wary of funds that allow related-party transactions

·        Avoid those with high loan-to-value ratios and lack of diversity of loans

·        The manager’s experience is crucial.

Tobias Taylor is the CEO of Fund Managers Central Limited, manager and issuer of the Midlands Mortgage Trust. The PDS for the Midlands Mortgage Trust is available at www.midlandsmortgagetrust.co.nz.

This article was written for the Profit https://www.theprofit.co.nz/ Article written 11 July 2019 for August Issue.

[1] https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions

[2] https://www.canstar.co.nz/kiwisaver/surviving-in-a-low-interest-environment/

[3] https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12067173

[4] https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-90-day-rate

[5] https://moneymag.com.au/four-alternatives-to-term-deposits/

CEO Appointment – Fund Managers Central Ltd

Following an extensive search and recruitment process, Fund Managers Central Ltd (FMCL), manager of Midlands Mortgage Trust (MMT), is pleased to confirm the appointment of new CEO Tobias Taylor, as of 1st July 2019.


Born and educated in Hawke’s Bay, following an initial military career, Tobias has built a successful career in banking and financial services over the last 20 years.  This time has included roles in London, Wellington and Hawke’s Bay.


Tobias has worked in various roles with larger corporate firms such as BNP Paribas and BNZ.  More recently, in 2008 Tobias established Hawke’s Bay firm Barnes Mossman Financial Services (BMFS) which then joined the Spicers group in 2014. As Managing Principal, Spicers Hawke’s Bay, Tobias and his team were multiple award winners within the AMP group.  Spicers was merged with another AMP company AdviceFirst in 2017. Thereafter, Tobias was appointed as the national Head of Wealth Management moving between Hawke’s Bay and Wellington.


“We are thrilled to have secured someone of Tobias’ experience and leadership capability to lead our company and we look forward to welcoming him to the FMCL team when he starts with the business on the 1st July 2019,” said FMCL Board Chairman Peter Ellis.


Tobias resides in Havelock North, Hawke’s Bay, with his wife and their three school-aged children.


If you require any further information on this announcement, please do not hesitate to contact Peter Ellis via the FMCL/MMT office:

Fund Managers Central Limited (as managers for Midlands Mortgage Trust)

120 Karamu Road Nth, PO Box 609, Hastings 4156

Telephone: (06) 870 3260

Freephone:  0800 870 326

Financial Markets Authority registration success

Midlands Mortgage Trust is now focused on growth following the licensing of its manager, Fund Managers Central Limited by the Financial Markets Authority.

Midlands Mortgage Trust general manager Peter Harrison said the FMA Managed Investment Scheme licensing process which took 18 months to complete has put the Fund Manager in a strong position to consolidate and increase its market in the Central North Island.

“We now have a robust platform under the new legislative regime and are well positioned to develop new opportunities.

“We have been through a rigorous accreditation process which has seen us strengthen our governance, appointing an independent chairman and rationalising the board over the last 12 months as well as adding staff resources focused on compliance,” Mr Harrison said.

Former Farmlands Cooperative chief executive Peter Ellis has been appointed chairman. Dunedin businessman Peter Hutchison and Central Hawke’s Bay farmer and broadcaster Steven Wynn-Harris have joined existing board members Ken Horner, Graham Throp and John Campbell to give a well-rounded board with a good mix of skills and experience.

“We are already seeing the benefit of these appointments through the development of a new strategic plan.

“The Trust’s investment portfolio has already grown by 10 percent in the last month with the acquisition of funds previously managed by a Hawke’s Bay law firm,” he said.


Independent Director joins Midlands

Fund Managers Central Limited (the manager of Midlands Mortgage Trust) is delighted to announce the appointment of Steve Wyn-Harris as an independent director.

Steve is a well-known farmer, broadcaster, columnist and director with a farming career that began in 1985 with the purchase of a 180ha property in Central Hawkes Bay after he had graduated from Lincoln University. The family holding has since been added to with three other small blocks so that currently they have 350ha of sheep, beef and forestry.

Steve writes the weekly ‘From the ridge’ column for NZ Farmers Weekly which has a circulation of 130,000 and he is familiar to listeners of Radio Sport and Central FM broadcasting several times per week on these stations with themes running through the range of farming, politics and sport.

Steve’s corporate experience has been gained at the highest and best levels having served on the boards of Landcorp (2003-2007) and Farmlands (2006-2012). As a community-minded individual he also serves on various committees and boards of trustees and will provide great input into Governance issues as we progress to a new regime as a licensed manager under the Financial Markets Conduct Act.

As an independent director on our board, Steve will chair our audit committee. The audit committee is not only responsible for overseeing the audit of the accounts of Midlands Mortgage Trust and the management company but also has oversight on compliance matters for various aspects of securities legislation covering the fund’s operations.

His expertise in Human Resource issues gained at Farmlands and Landcorp will also be useful. At home Steve gets considerable help in running the family business from his wife Jane and, when at home, their sons Jason, Hugh and Matt. Their successful farming operation has seen them win a number of prestigious awards in that area over the years and Steve has also been recognised for his contributions as an exceptional communicator.

In accepting his appointment to the board, Steve is looking forward to the challenge of adding to his range of skills in becoming involved with the Finance industry. His brand of ‘no nonsense common sense’ will be a welcome addition the range of skills and experience on the board as it forges a path to a brighter future for all stakeholders.

Get your free info pack

To learn more about investing with Midlands Mortgage Trust enter your details below.

This info pack contains everything you need to know about the Fund to help you make an informed decision.