Important information for investors in the Australasian Property Fund and the International Property Fund.
The previous advice provided to SMT members regarding asset managers/the underlying investment/fund managers has changed. The changes allow us to improve how the assets are hedged back to New Zealand dollars. The underlying investment/fund managers for the Australasian Property Fund and the International Property Fund will be as follows:
| Fund | Asset Class | Previous Manager | New Manager |
| Australasian Property Fund |
Australian Property NZ Property |
Vanguard Kernel |
Macquarie Unchanged |
| International Property Fund | International Property | State Street | Kernel |
The replacement funds/managers follow the same investment style (index-managed) and are in effect a like-for-like replacement for the ‘proposed’ managers. Further, this change does not impact the investment objectives and strategies of the International and Australasian Property Funds nor the annual fund charges and the estimated transaction costs (nil for the International Property Fund and 0.10% for the Australasian Property Fund) outlined in the communication.
If members of the Australasian Property Fund and International Property Fund are eligible to redeem their investment in the Fund, and would like to do so, any transaction fees arising will be refunded if the refund request is received on or before 31 March 2023. Eligible redemption requests can be made to Lifetime@linkmarketservices.com.
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 | Macquarie Investment Management Global Limited* |
| New Zealand Listed Property | Kernel Wealth Limited |
| International Listed Property | Kernel Wealth Limited |
*Mercer is the licenced manager of the underlying funds that provide the Scheme Funds with exposure to International Equities, Australian Equities and Australian Property. 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:
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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.
Fisher has a 24-year track record in funds management and is a specialist New Zealand Fixed Interest and Cash investment manager. They apply a conviction-based approach to investment management and a clear and practical approach to responsible investment.
Fisher is a signatory to the United Nations sponsored Principles for Responsible Investment (PRI). Fisher’s Socially Responsible Investing Policy touches on every element of their investment process, ensuring the investment issues when undertaking fundamental analysis of a company. Fisher also maintains a Prohibited Companies List that identifies companies which do not meet Fisher’s ESG standards (because of the products they produce, services they engage in, or their past conduct). Fisher will not invest in companies on this list.
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Simplicity NZ Limited (Simplicity)
Simplicity has been selected to manage the Scheme’s investment 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.
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Mercer (N.Z.) Limited (Mercer)
Mercer has been selected to manage the Scheme’s investment in International Equities, Australian Equities, International Fixed Interest, and Australian Property.
The Funds attain exposure to:
- 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 portfolio 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. Legal & General make the decisions about what the underlying funds invest in. - 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. Macquarie makes the decisions about what this underlying fund invests in. - International Fixed Interest by investing in the Mercer Ethical Leaders Hedged Global Fixed Interest Fund.
Mercer have appointed UBS Asset Management (Australia) Ltd (UBS) as the investment manager of this underlying fund. UBS makes decisions about what this underlying fund invests in. - Australian Property by investing in the Mercer Australian Property Index Fund.
Mercer have appointed Macquarie Investment Management Global Limited (Macquarie) as the investment manager of this underlying fund. Macquarie makes the decisions about what this underlying fund invests in.
Mercer is part of Marsh & McLennan Companies, Inc (MMC), a 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. There Socially Responsible Portfolios, have additional exclusions - gambling, alcohol, adult entertainment and fossil fuels.
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Kernel Wealth Limited (Kernel)
Kernel has been selected to manage the Scheme’s investments in New Zealand Listed Property and International Listed Property. The Funds attain this exposure by investing in the Kernel NZ Commercial Property Fund and the Kernel Global Green Property Fund.
Kernel is a New Zealand investment manager providing efficient exposure to listed property assets. Property is an important sector in which Kernel funds hold the real estate 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 Green Property Fund tracks the Dow Jones Global Select ESG Real Estate Securities Index 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.