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INVESTOR

UPDATE

NOVEMBER

2020

FUND ENHANCEMENTS

As part of our regular review and monitoring of the investment funds, Trust Management has implemented a number of minor enhancements to the PIE Funds. These enhancements are summarised below. 

Trust Management have also issued a new Fund Product Disclosure Statement, Other Material Information ('OMI') and Statement of Investment Policies and Objectives ('SIPO') which reflect these changes, a copy of which can be downloaded below.

WHICH FUND?

Trust Management International Bond Fund.

WHAT IS THE CHANGE?

Enhanced ESG screening

The International Bond Fund will adopt ethical screens ensuring there is no exposure to non-government issuers whose major business activities are tobacco products, alcoholic beverages, pornography, gambling, armaments or the production or extraction of fossil-fuels.  Any treasury and government-related issuers with an MSCI ESG government rating below “BB” will also be excluded from the portfolio.

Addition of corporate bonds

The Fund will include both government bonds and investment grade bonds issued by companies. 

Change of Underlying Fund and Fund Manager.

The Fund will invest in the iShares ESG Global Bond Index Fund, an Australian unit trust managed by BlackRock Investment Management (Australia) Limited.

Change in Benchmark.

The benchmark index will change from the FTSE World Government Bond Index Hedged to NZ Dollars  to the Bloomberg Barclays Global Aggregate Index Hedged to New Zealand dollars. 

Change in buy/sell spread.

The Fund buy/sell spread will change to 0.10% / 0.15% to align with the underlying fund. 

WHY CHANGE?

Income is important to our investors.

High rated corporate bonds can provide more income than sovereign bonds without materially changing the level of risk.

With long dated government bond yields now sitting at record low levels, the new strategy is expected to deliver stronger returns given its higher income yield and shorter term, whilst still providing important defensive characteristics for a diversified portfolio. 

The underlying fund incorporates environmental, social and governance  ('ESG') screening aligned with our  Ethical Investment Policy.

WHICH FUND?

Trust Management New Zealand Bond Fund.

WHAT IS THE CHANGE?

Change in Benchmark.

The benchmark index will change from the

S&P/NZX New Zealand Government Bond Index

to the Bloomberg NZ Bond Composite 0+ Year index

(Bloomberg NZ Bond Index). 

Remaining the Same.

Trust Management will continue to maintain

the same ESG screens in the management of the Fund.

 

WHY CHANGE?

Income is important to our investors.

High rated corporate bonds can provide more income than sovereign bonds without materially changing the level of risk.

The Bloomberg NZ Bond Index measures the performance of the New Zealand debt market and includes not only government bonds, but also corporate and local authority issuers.  The change in benchmark index provides exposure to a wider range of fixed interest instruments with a slightly higher overall yield. 

The fund will continue to incorporate ESG screening aligned with our  Ethical Investment Policy

WHICH FUND?

Trust Management International Share Fund.

WHAT IS THE CHANGE?

Enhanced ESG screening

The underlying fund’s sustainability criteria has been broadened to include additional climate change and carbon intensity targets along with a broadening in the securities exclusions criteria that will exclude exposure to companies that exhibit poor adherence to international norms in relation to environmental protection, human rights, labour standards and corruption.

Name Change

The Trust Management International Share Fund invests into the State Street Low Carbon ESG International Equities Index Trust. The name of this fund has changed to the State Street Climate ESG International Equity Fund.

Change in Benchmark.

The benchmark for the International Shares Fund was the MSCI World ex Australia Select ESG Low Carbon Integrated Index with net dividends reinvested 50% hedged to New Zealand dollars, and will change to the MSCI World ex Australia Index 50% hedged to New Zealand dollars. 

WHY CHANGE?

Following a review by the underlying manager,  the Fund’s sustainability criteria has been broadened to include additional climate change and carbon intensity targets along with a broadening in the securities exclusions criteria that now prohibits exposure to companies that experience severe ESG controversies and are violators of the United Nations Global Compact. 

The climate change strategy targets reductions in carbon emissions while reallocating capital towards companies benefiting from the transition to low carbon technologies and companies more resilient to climate change.

BALANCED FUND

Investors should note that the Trust Management Balanced Fund gains its exposure to the asset classes through investment in the funds impacted by the changes outlined above.

© 2020 Trust Investments Management Limited