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FUND CHANGES

As part of our regular review and monitoring of the investment funds, Trust Management intends to implement a number of enhancements to the PIE Funds.

These enhancements are summarised below. 

Trust Management will issue a new Fund Product Disclosure Statement, Other Material Information ('OMI') and Statement of Investment Policies and Objectives ('SIPO') which reflect these changes. The effective date for these documents will be 31 May 2021.

NZ BOND FUND

CHANGE TO UNDERLYING MANAGER

WHAT IS CHANGING?

Following a review of the management strategy of the Fund we have decided to outsource the stock selection decision making to a specialist fixed interest manager, Nikko Asset Management (‘Nikko’).  Nikko will make day-to-day investment decisions, based on a segregated investment mandate (set by Trust Management) which reflects the unique to investing objectives of charities, being a focus on income generation, avoidance of capital loss, and considerations of environmental, social and governance (ESG) factors. 

WHY CHANGE?

The Fund’s purpose is to provide investors with a diversified exposure to the New Zealand bond market. The Fund is intended to form part of an investor’s balanced portfolio which would include other asset classes. Trust Management has managed the Fund since inception, and the primary management strategy for the Fund to date has been one of buy-and-hold with transactions largely prompted by cash flows.

The fixed interest investing environment is expected to remain challenged, characterised by interest rates at record lows and increased market volatility.  Trust Management believes a more highly active approach in the management of the asset class is warranted.

 

Trust Management undertook a thorough process to research and select the manager it considers best in class.  This process involved reviewing fund managers within New Zealand to select the manager with the strongest capabilities. 

 

The change is expected to deliver stronger investment outcomes for investors through utilising the investment insights and skillset of a specialist fixed interest manager.

FEES AND EXPENSES

The Fund’s management fee was reviewed in 2019 and materially reduced at the time to reflect the growth in the Fund. Trust Management has resolved to keep the management fee unchanged at 30bps, which includes the underlying manager's fees. The Fund expenses are expected to decrease as a result of the change. After the change is implemented, we expect fund expenses to be 10 bps.

FUND NAME CHANGES

WHAT IS CHANGING?

As part of Trust Management’s commitment to responsible investing, we have continued to enhance our product offering and management of ESG factors.  Enhancements we have integrated across the Fund in recent years include deeper integration of environmental, social and governance (‘ESG’) factors within the investment decision-making process and a broadening of types of sectors and companies that we avoid (‘unethical businesses’).

As a result of a recent review of the Funds, the name of five of Trust Management’s PIE funds will therefore change with effect from 1 June 2021 to highlight that the Funds are managed in line with our commitment to responsible investing:

Trust Management ESG NZ Bond Fund

Trust Management ESG Australasian Share Fund

Trust Management ESG International Share Fund

Trust Management ESG International Bond Fund

Trust Management ESG Balanced Fund

WHY CHANGE?

“Responsible investing, also known as ethical or sustainable investing, is a holistic approach to investing, where social, environmental, corporate governance and ethical factors are considered alongside financial performance when making an investment”[*].

The five funds listed all incorporate a broad range of key responsible investing strategies, including:

  • Integration of ESG factors in the investment decision-making process, resulting in allocation changes based on these factors.  This might mean, for example, having a higher exposure to companies with stronger ESG characteristics or companies with lower carbon footprint and lower exposure to companies that exhibit poor metrics. 

  • Broad-based securities level exclusions, usually focussed on environmental “E” and social “S” issues.  For the PIE Funds, this may mean ensuring the Funds have no exposure to companies involved in the manufacturing of controversial weapons or tobacco products, or those that may utilise child labour or may have been exposed to corruption. 

  • Undertake stewardship activities, including responsible voting of proxies and engagement with companies on ESG issues.  In a practical sense, this means using your influence as a shareholder wisely to bring about positive change.

The offering of ESG funds aligns with Trust Management and our investors' values and acknowledges the firm’s commitment to responsible, sustainable and ethical investing.

 

[*] Responsible Investment Association Australasian definition

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.