Responsible Investment

Responsible Investment Policy

Our Responsible Investment (RI) Policy is contained within the Octagon SIPO which can be found on this website under the Forms and Documents section. The SIPO contains the complete RI policy while this web page provides a summary of our RI policy and how we use it.

The Octagon Responsible Investment Policy is split into three parts.

1. Screening of investment products

Before Octagon makes a direct investment (as opposed to an indirect investment – see Investments into unrelated underlying funds, below) into a financial product for a fund we will use screening tools provided by Sustainalytics, a leading independent ESG and corporate governance research, ratings and analytics firm, to identify whether the relevant entity derives revenue from any of the following activities:

• The manufacture of core weapon systems, or components/services of the core weapons system that are considered to be essential for the lethal use of controversial weapons. Controversial weapons include cluster munitions and anti-personnel mines; nuclear explosive devices (including the missiles that deliver nuclear warheads), chemical and biological weapons;
• The manufacture or sale of assault weapons to civilians;
• The production of tobacco products;
• The capture and processing of whale meat.

The screening we apply does not extend to the sale or distribution of these products. For example, we exclude tobacco manufacturers but not retailers who sell tobacco products e.g. supermarkets.

We publish the companies identified through our screening process on our exclusion list which is available here (download PDF), which we update every six months. If our screening process identifies that a company derives revenues 5% or more from the activities listed above, then no investment is made.This is done for moral and ethical reasons, i.e.  we do not wish to be associated with these activities.

2. Consideration of ESG factors

For directly held equities, listed property and fixed interest securities, Octagon uses its ESG Risk Assessment framework to help identify the material ESG risks and opportunities associated with our investments. This ESG Risk Assessment utilises data and research from various sources including Forsyth Barr’s Carbon and ESG (CESG) ratings and related methodology, Refinitiv (now LSEG) and Sustainalytics data, as well as information made available in the public domain i.e. news and media outlets

Octagon determines the extent to which these risks and opportunities are considered in its investment decision. ESG factors may not be determinative of an investment decision and Octagon may invest in securities that have less favourable ESG ratings.

3. Controversies

From time to time unexpected information about the companies we invest in may become public. If Octagon determines further investigation is warranted we will convene the Investment Committee and apply the following steps to determine what response and actions, if any, should be undertaken.

• The Chair of the Investment Committee will direct Octagon’s ESG team to investigate further and present the information and its assessment to the Investment Committee;
• The Investment Committee will consider the information provided and determine whether the issuer’s activities are negatively flagged and / or inconsistent with a positive assessment under the assessment criteria of Octagon’s ESG Risk Assessment;
• The Investment Committee will determine an appropriate action which may be

1. 1. to note for internal reference only,
   2. to note and partially or fully sell the relevant financial products,
   3. to undertake (1) and advise investors via its website and / or via other media,
   4. to undertake (2) and update investors via its website and / or via other media

• If it is decided that a partial or full divestment is necessary, the investment will be sold in a reasonable timeframe, taking into account the particular circumstances, market conditions, and the duty to act in the best interest of investors.

A copy of the Octagon Investment Committee Charter, detailing all of the committee’s responsibilities and activities is available on the Octagon website here.   

Investments into unrelated underlying funds

Before an Octagon fund invests into an underlying managed investment scheme that we do not directly manage, we will consider the responsible investment framework for that scheme. Octagon will always seek to invest in underlying schemes with responsible investment frameworks comparable to the Octagon Investment Funds, where it can do that without compromising the funds’ other investment objectives.

At the end of each quarter, Octagon will make available on its website a list of any of the underlying scheme’s direct investments (as are available to the Investment Manager) that appear on our exclusions list as determined by our screening activities.

Voting Policy

Octagon will exercise its voting power in relation to all of the Octagon Investment Fund’s eligible assets. Octagon has contracted with Institutional Shareholder Services (ISS), the world's leading provider of corporate governance and responsible investment solutions to provide proxy research, voting and reporting to Octagon.

When Octagon appoints an investment manager to one of our funds we will require that manager’s voting policy and procedures to be consistent with Octagon’s policies. We also require the investment manager to provide regular reports on their voting in relation to any of the Octagon Investment Funds’ assets.

Previous Responsible Investment Policy

This responsible investment policy updates and replaces the prior investment policy. Prior to 4 October, 2023 Octagon made our responsible investment assessments based on the framework made available by the NZ Super Fund which can be found here.

Exposure to Securities Appearing on our Exclusion List

As at 30 September 2024 the Income Fund, Balanced Fund and Growth Fund each had an investment in the Hunter Global Fixed Interest Fund.

Hunter Global Fixed Interest is a fund offered by Harbour Asset Management. Harbour Asset Management as the Manager of the Hunter Global Fixed Interest Fund has appointed PIMCO Australia (PIMCO) as the fund’s Investment Manager.

At that date, the Hunter Global Fixed Interest Fund had financial exposures to entities associated with Airbus SE, Altria Group Inc., BAE Systems Plc, BAT International Finance Plc, The Boeing Company, Imperial Brands Finance Plc, Honeywell International Inc., Leonardo Sp.A, Lockheed Martin Corp., Northrop Grumman Systems Corp., and RTX Corp.; all companies that participated in activities prohibited by our negative screening process and that subsequently appear on our Exclusion list (published here).

The securities issued by the companies detailed above were not specifically targeted for investment by PIMCO but are the consequence of financial hedging activities undertaken by PIMCO when managing the credit risk (the risk of default) within the fund’s portfolios of investments

Investments identified by the Office of the United Nations High Commissioner for Human Rights (OHCHR).

We have compared the investment exposures of the Octagon Investment Funds to the Human Rights Council report on Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and in the occupied Syrian Golan, dated February 2020, as well as the version updated as at 30 June 2023, which can be found here.

Using Octagon Investment Funds Scheme data as 30 September 2024, our investigation has determined that the scheme’s main exposure is to Airbnb, via an investment in the Intermede Global Equity Fund. In addition, the scheme has smaller investment exposures to Motorola Solutions and Expedia and Alstom, a function of its holdings in units issued by the Hunter Global Fixed Interest Fund: PIMCO Australia Pty Ltd is the investment manager of the fund.

We calculate these to be: