Our Investment Approach

Investment Principles and Beliefs

The policies, standards and procedures are documented in a Statement of Investment Policies and Objectives (SIPO) and have been set by the trustees on the basis of investment principles and beliefs.

The principles that drive the current approach are:
  1. Asset allocation is the prime determinant of the performance of a portfolio over the long-term.
  2. Risk and return are strongly and positively related.
  3. Diversification can be used to reduce volatility.
  4. Taxation and the costs of investment management can materially affect the net returns earned by investors.
  5. The market prices of illiquid assets reflect a premium to investors (in the form of additional investment return) for bearing the risk of not being able to sell the assets on demand at their market value.
The beliefs that drive the current approach are:
  1. The quality of the governance of an investment program has a direct effect on the level of risk-adjusted returns generated by the program. 
  2. Active management is a valid investment strategy – the trustees believe there are opportunities for active management to generate higher returns and manage risk where sufficient market inefficiencies exist. 
  3. There is an incremental return over time associated with the hedging of foreign currency risk in a New Zealand-domiciled portfolio due to the existence of an exchange risk premium.  
  4. Investors with a long-term horizon can outperform more short-term focused investors over the long-run. 

Structure of Governance

The trust consists of a board of six trustees that are elected by Consumers for terms of four years. Trustees continuously review and adopt global best practices in the oversight of the trust’s portfolio.  The day-to-day operations of the trust are managed by a Chief Executive and staff.

Trustees recognise that specialist advice and/or services may be required in the areas of taxation, portfolio management and investment management, and seek the assistance of third-party providers as required. Professional advisors must be independent of investment managers and providers of managed fund products.

The trustees have appointed an investment advisor to provide strategic advice, to assist the trustees to develop their investment policies and to help evaluate the performance of the Diversified Portfolio and the Trust’s investment managers. The appointed investment advisor is Frontier Advisors. Frontier Advisors has been at the forefront of delivering investment advice and technology to institutional investors for more than 25 years. They provide advice on $600B of assets across the superannuation, charity, public, insurance and higher education sectors.

Our strategic objectives for our investments are:

To invest the assets of the Diversification Portfolio with the aim of generating sufficient total investment returns over the long-term to:

•    Meet the costs of managing the Diversification Portfolio;
•    Comply with the distribution policy; and
•    Maintain the real (inflation-adjusted) value of the Diversification Portfolio to maintain fairness between present and future generations.

Investment strategy

  • Global equities
  • Australasian equities
  • Private Infrastructure (Global)
  • Private Real Estate (Australasian)
  • Private Equity
  • Private Debt (NZ)
  • NZ Cash

Strategic Asset Allocation

The SAA adopted by the trustees as the target mix of asset classes to which the Diversification Portfolio will be managed, as a matter of policy, is shown below:

Spending Policy

The Trustees aim to distribute in any given financial year a sum equal to 4.0% of the market value of the Diversification Portfolio.

Current Managers

Global Equities 

Vanguard Investments               Vanguard International Small Companies Index Fund                                                      www.vanguard.com.au               
Mercer              Mercer Hedged Overseas Shares Index Portfolio
Mercer Emerging Markets Fund

Australasian Equities 

Nikko Asset ManagementCore Equity Fund                                                                 www.nikkoam.co.nz
QuayStreet Asset
NZ Equity Fund                 

Unlisted Property

Mercer                   Mercer Unlisted Property Fund                                  www.mercer.co.nz  

Unlisted Infrastructure 

Mercer                   Mercer Unlisted Infrastructure Portfolio            www.mercer.co.nz

Private Equity

LGT Capital Partners LtdCrown Global Opportunities VII Fund      www.lgtcp.com
Continuity Capital                Private Equity Fund No.2, Fund No.4 and Fund No.6                                                           www.continuitycp.com
Oriens CapitalOriens Capital Private Equity Fund No. 1 and Fund No. 2www.orienscapital.co.nz
Pencarrow PEPencarrow Bridge Fundwww.pencarrowpe.co.nz
Waterman CapitalWaterman Fund 3 and Fund 4www.waterman.co.nz
Enterprise AngelsFund No. 2 and Fund No. 3www.enterpriseangels.co.nz
WNT VenturesFund No. 2 and Fund No.3www.wntventures.co.nz
Purpose CapitalImpact Fundwww.purposecapital.co.nz
Pioneer CapitalPioneer Capital Partners Fund IVhttps://pioneercapital.co.nz/


Nikko Asset Management   Nikko AM Wholesale NZ Cash Fund                                                                  www.nikkoam.co.nz           

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