Lifetime Investment Management

 

We determine the investment strategy, objectives and policy of each Fund and set the benchmark asset allocations and ranges (where applicable) that reflects that strategy, objectives and policy. We then select one or more underlying funds and underlying fund managers that have adopted strategies, objectives and policies that provide the exposure required for the Funds.

Underlying fund managers used by the Scheme may invest in a broad range of shares (also known as equities), fixed interest investments, listed and unlisted property trusts/funds, cash instruments and in managed funds. Securities held by underlying fund managers or appointed investment managers may be listed or unlisted. Underlying fund managers may borrow, short-sell securities and use derivatives.

The current underlying asset exposure(s) are as follows:

 

 New Zealand Fixed Interest And Cash  Fisher Funds Management Limited
 New Zealand Equities  Simplicity NZ Limited
 International Equities – Hedged  Legal & General Investment
 Management Limited*
 International Equities – Unhedged  Legal & General Investment
 Management Limited*
 International Fixed Interest  UBS Asset Management (Australia) Ltd*
 Australian Equities  Macquarie Investment Management
 Global Limited*
 Australian Property  Vanguard Investments Australia Limited
 New Zealand Listed Property  Kernel Wealth Limited
 International Listed Property  Kernel Wealth Limited

 International Listed Infrastructure

 Kernel Wealth Limited

*Mercer is the licenced manager of the underlying funds that provide the Scheme Funds with exposure to International Equities, International Fixed Interest and Australian Equities. Mercer have appointed these external investment managers to make the decisions about what the underlying funds invest in.

 

Underlying fund manager details are set out below:

  • Fisher Funds Management Limited (Fisher)

Fisher has been selected to manage the Scheme’s investments in New Zealand fixed interest and cash. The Funds attain this exposure by investing in the Fisher Institutional New Zealand Fixed Interest Fund and Fisher Institutional New Zealand Cash Fund.


As a long-established, well-resourced, specialist New Zealand cash and fixed interest investment manager, the five-strong specialist fixed interest team has over 80 years of combined experience across both public and private debt markets, with significant strengths in economic analysis, credit assessment and portfolio management. Fisher’s size and standing in the New Zealand fixed interest market provides clients with many benefits, ranging from economies of scale in trade execution to preferred access to high-grade investment opportunities through its extensive funding relationships.


Fixed income investing is unique in that the cost of making an investment and being wrong is far greater than the gain received from being right. This uneven pay-off profile is why a process that prioritises loss avoidance is imperative. An uncertain future ensures things will not always go to plan. A margin of safety is there to provide the necessary confidence that, when the unexpected happens, these investments will weather the storm.

All assets managed by Fisher Funds are underpinned by their responsible investment policy and framework. Responsible investment is embedded into their research process and is applied across all portfolios and asset classes. This reflects their beliefs, approach to investing, exclusions and active stewardship lens.

 

 

  • Simplicity NZ Limited (Simplicity)

Simplicity has been selected to manage the Scheme’s investments in New Zealand Equities. The Funds attain this exposure by investing in the Simplicity NZ Share Fund.


Simplicity provides a practical, low-cost option for the Scheme’s New Zealand equity exposure through their index-tracking NZ Share Fund.


Simplicity is a non-profit investment manager and applies a Responsible Investment Policy that excludes investment in companies with significant exposure (based on defined revenue thresholds) to the fossil fuel, alcohol, tobacco, gambling, adult entertainment, civilian firearms, military weapons, and nuclear power industries, as well as companies deemed to be non-compliant with the principles of the UN Global Compact under the following categories – Human rights, Labour, Environment, and Anti-Corruption.

 

 

  • Kernel Wealth Limited (Kernel)

Kernel has been selected to manage the Scheme’s investments in New Zealand listed property, international listed property, and international listed infrastructure. The Funds attain this exposure by investing in the Kernel NZ Commercial Property Fund, the Kernel Global Property (NZD Hedged) Fund, and the Kernel Global Infrastructure (NZD Hedged) Fund respectively.

Kernel is a New Zealand investment manager providing efficient exposure to listed property and listed infrastructure assets. Listed property and listed infrastructure are important sectors in which Kernel funds hold the securities to match their weight in the respective indices, representing good tax and value balance.

As a manager, Kernel offsets their carbon emissions and is a certified Living Wage Employer. Kernel funds are index tracking, which determines the core sustainability/ESG factors.

The Kernel NZ Commercial Property Fund tracks the S&P/NZX Real Estate Select Index which is designed to measure the performance of the largest and most liquid members of the S&P/NZX All Index and classified within the GICS (Global Industry Classification Standard) real estate sector. The index does not consider sustainability/ESG factors.

The Kernel Global Property (NZD Hedged) Fund tracks the Dow Jones Global Select ESG Tilted RESI which is designed to measure the performance of publicly traded real estate securities while overweighting those companies with relatively high GRESB (Global ESG Benchmark for Real Assets) total scores and underweighting those with lower or zero total scores. GRESB are a global leader in measuring and assessing the ESG performance of real estate companies.

The Kernel Global Infrastructure (NZD Hedged) Fund tracks the Dow Jones Brookfield Global Infrastructure Index which is designed to cover all sectors of the global listed infrastructure market. To be included in the index, a company must derive at least 70% of cash flows from infrastructure lines of business.

  • Mercer (N.Z.) Limited (Mercer)

Mercer has been selected to manage the Scheme’s investments in International Equities, Australian Equities, and International Fixed Interest.

The Funds attain exposure to:

1. International Equities by investing in the Mercer Socially Responsible Overseas Shares Index Portfolio and Mercer Socially Responsible Hedged Overseas Shares Index Portfolio. We have split the allocation 50% hedged and 50% unhedged at this time.

Mercer have appointed Legal & General Investment Management Limited (Legal & General) as the investment manager of these underlying funds. Within the scope of the mandate set by Mercer, Legal & General make the decisions about what the underlying funds invest in.

2. Australian Equities by investing in the Mercer Macquarie Australian Shares Fund. Mercer have appointed Macquarie Investment Management Global Limited (Macquarie) as the investment manager of this underlying fund. Within the scope of the mandate set by Mercer, Macquarie makes the decisions about what this underlying fund invests in.

3. International Fixed Interest by investing in the Mercer Responsible Hedged Global Fixed Interest Index Fund.

Mercer have appointed UBS Asset Management (Australia) Ltd (UBS) as the investment manager of this underlying fund. Within the scope of the mandate set by Mercer, UBS makes decisions about what this underlying fund invests in.
Mercer is part of Marsh & McLennan Companies, Inca Fortune 250 company.

The Mercer network gives Scheme investors access to a global investment capability within tax effective funds designed for New Zealand investors. Mercer focuses on selecting investment managers who are specialists within their particular investment markets and who have demonstrated capability and conviction in portfolio construction and the execution of investment strategies. A formalised process of screening potential managers, including a detailed assessment of their ability and performance, is coupled with on-going monitoring and formal performance reviews. The aim is to achieve a level of returns meeting or exceeding the objectives set, from time to time, for each fund and which is consistent with the risk profile of each fund.

Mercer believes a sustainable investment approach is more likely to create and preserve long-term investment capital and, more specifically, that ESG factors can have a material impact on long-term risk and return outcomes and these should be integrated into the investment process. As an overarching principle, Mercer is committed to investing responsibly and prefer an integration and engagement-based approach. Mercer excludes investments in controversial weapons, tobacco companies and Russian assets across all their investment portfolios.

Their Socially Responsible Portfolios have additional exclusions
- gambling, alcohol, adult entertainment, and fossil fuels.

 

 

  • Vanguard Investments Australia Limited (Vanguard):

Vanguard has been selected to manage the Scheme’s investments in Australian Property.

The Lifetime Australasian Property Fund attains this exposure by investing in the Vanguard Australian Property Securities Index ETF. Vanguard Investment Australia Limited (Vanguard) is the investment manager of this underlying fund and makes the decisions about what the underlying fund invests in.

Founded in 1975, Vanguard is one of the world’s largest and most trusted investment managers, with over USD$9 trillion in assets under management globally. Vanguard is widely recognised as a pioneer of index investing, bringing low-cost, diversified investment solutions to investors worldwide. Vanguard’s structure is unique – it is owned by its funds, which are in turn owned by their investors – ensuring Vanguard’s interests are aligned with those of its investors.

Vanguard Investment Australia Limited is a wholly owned subsidiary of The Vanguard Group, Inc., and has been operating in Australia since 1996. Vanguard has established a strong presence in the Australian market, providing a broad range of index funds and exchange traded funds (ETFs) across asset classes including equities, fixed interest, and property.