The Tauranga-headquartered BayTrust has committed a further $10 million allocation to impact investments, bringing the total to $20 million with plans to double that again over the next decade.
BayTrust chief, Alastair Rhodes, said the $250 million community trust will invest the new $10 million impact tranche across three different projects including $4.6 million to regional home ownership efforts by Habitat for Humanity, $4 million to local ‘deep tech’ fund WNT Ventures and $1 million to Māori-owned land restoration company, Tāmata Hauhā.
Earlier this year the Bay of Plenty trust invested $10 million in the BOP Housing Equity Fund in a foray into impact.
Rhodes said BayTrust was looking to increase its impact allocation from the current level of about 10 per cent of fund assets to 15 per cent eventually – implying about $40 million based on growth projections over the next 10 years.
“We really want to invest in the future success of our region and our people,” he said in a release. “With our grant funding being limited, we’re looking at ways we can maximise the impact we’re having by making use of our ~$250m balance sheet.”
The fund had identified housing, climate change, Māori development and “transitioning to a high wage economy” as the four key impact targets, Rhodes said.
He said community trusts would need innovative strategies such as impact investment to deliver on their core purpose in the years ahead, especially as grant funding “comes under pressure”.
BayTrust investment adviser, Cambridge Associates, assisted with the due diligence on the WNT fund, Rhodes said, while David Plummer, director of the 4am specialist consulting firm assessed the other impact investments.
Like most of its 11 counterparts in the sector, BayTrust turned in a negative investment result for the latest financial year, the annual report says.
“After a stellar prior year performance in 2021 (+24%) and reasonable returns last year (+6.3%) the returns this year were disappointing due to global market challenges (-1.3%),” the report says. “However, these returns were still strong when we compare against high growth Kiwisaver funds which had a medium loss for the year of (-3.4%) illustrating the benefits of BayTrust’s sustainable and globally diversified portfolio.”
Aside from the impact upgrade, the trust will increase its portfolio risk-weighting over the next few years from the current 75 per cent growth asset allocation.
“… we are working closely with our investment advisors to further refine and diversify our investment portfolio together with increasing our sustainable private investment allocations over the next two years as we move to an 85% growth allocation which aligns with the top performing perpetual overseas foundations model,” the 2023 BayTrust report says.
Total expenses fell slightly year-on-year to $1.67 million ($1.72 million in 2022) as grants dropped to $8.5 million from almost $12.9 million in the previous period.