Motif

Responsible Investment

Responsible investment, including environmental, social and governance considerations, is taken into account in the investment policies and procedures of the Investment Funds.

Before we make a direct investment for a Fund, we assess whether, in our opinion, the relevant entity is directly engaged in any of the following activities:

  • the manufacture of cluster munitions
  • the manufacture or testing of nuclear explosive devices
  • the manufacture of anti-personnel mines
  • the manufacture of tobacco products
  • the processing of whale meat

If our assessment is that the entity is directly engaged in any of those activities, then we don’t make the investment.

We will make our assessment based on the framework made available by the NZ Super Fund (see www.nzsuperfund.nz/how-we-invest/responsible-investment). We will ensure that none of our direct investments are on the NZ Super Fund’s exclusion list because of engagement in any of those activities at the time of purchase.

If we make a direct investment and subsequently form the view that the relevant entity is directly engaged in any of the activities listed above, we will sell the investment in a reasonable timeframe. We will check our direct investments against the most recently published NZ Super Fund exclusion list at least monthly.

Before a Fund invests into an underlying managed investment scheme that we don’t manage, we will consider the responsible investment framework for that scheme. We will seek to invest in underlying schemes with responsible investment frameworks comparable to ours, where we can do that without compromising our other investment objectives. At the end of each quarter, we will make available on our website a list of any of the underlying scheme’s direct investments (as are available to us) where we consider that the relevant entity is directly engaged in any of the activities above (based on the NZ Super Fund’s exclusion list at that time).

As at 31 March 2022 the Income Fund, Balanced Fund and Growth Fund each had an investment in Smartshares Global Bond ETF (GBF)

At that date, the GBF had financial exposures to entities associated with Altria Group Incorporated, BAT International Finance PLC, Imperial Brands Finance PLC, Honeywell International Incorporated, Lockheed Martin Corporation, Northrop Grumman Systems Corporation and Reynolds American Incorporated, companies that appeared in the relevant sections of NZ Super Fund’s Responsible Investment exclusion list as at 31 March 2022.

 

Exposure to securities appearing in the relevant section of the NZ Super Fund’s Responsible Investment exclusion list (March 2022)*

  Smartshares Global Bond ETF (GBF)

Octagon Investment Funds

 
Income Fund 0.00005%
Balanced Fund 0.00002%
Growth Fund 0.00001%

*calculated as the combined net exposure (basis market value) of each fund to the securities of companies detailed in the relevant sections of the NZ Super Fund’s investment exclusion list dated as at 31 March 2022.

Please refer to NZX Smartshares Exchanged Traded Funds Responsible Investment Policy for further information on its approach to responsible investing.

Divider

Investments in Russian Securities

Octagon Investment Funds investment exposures to Russia associated with our holdings in Vanguard’s ESG international Stock ETF and Smartshares Global Bond ETF, as at 31 March 2022, are detailed in the table below.

It is our intention to update this information at the end of each quarter, unless there is a material change

Vanguard ESG International Stock ETF

Octagon Balanced Fund Octagon Growth Fund
RUBLE CASH 0.00001% 0.00001%
Total 0.00001% 0.00001%

 

Smartshares Global Bond ETF

Octagon Income Fund

Octagon Balanced Fund Octagon Growth Fund
RUBLE CASH 0.00002% 0.00001% 0.00000%
SBERBANK (SB CAP SA) REGS 0.00495% 0.00173% 0.00089%
Total 0.00497% 0.00174% 0.00089%

The Vanguard ETF is passively managed (market index tracking) and forms part of our strategy to better align the investment performance of these Octagon Investment Funds to their international equities’ market index, the MSCI ACWI Net Total Return Index, 50% hedged to the New Zealand dollar.

The manager of the FTSE Global All Cap ex US Choice Index, the market index of the Vanguard ETF, has announced that effective from Monday 7 March 2022, Russia will be deleted from the index. Accordingly, Vanguard as manager of the Vanguard ETF, has advised that it has suspended purchases of Russian securities and is considering options on how best to exit its current Russian investments; all investments currently held, with the exception of a very small amount of cash, are recorded and valued at zero. 

By investing in the Smartshares Global Bond ETF, we have out-sourced the active investment management of our international fixed interest securities to PIMCO Australia Pty Ltd, which forms part of our strategy to align the investment performance of these Octagon Investment Funds to their international fixed interest market index, the Bloomberg Global Aggregate Total Return Index, 100% hedged to the New Zealand dollar.

PIMCO, the investment manager of the Smartshares Global bond ETF has advised that it has recently consulted with the Office of Foreign Asset Control, the relevant US regulator, and is still considering its firm-wide strategy on managing Russian assets in its clients’ investment portfolios. On this basis, the Smartshares Global bond ETF, will continue to hold its Russian investments.

We will update our clients with any relevant information as soon as we can, and please contact us on 0800 628 246, if you need any further information or have additional questions.

 

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