The Tauranga-based BayTrust has boosted its coffers to the tune of about $42 million over the 12 months to March 31 following a marked investment performance turnaround bolstered by an increased allocation to growth assets.
According to the just-released BayTrust annual report, the community trust ended the period with a record $246 million under management – up about 20 per cent compared to the same time last year – after subtracting annual grants of $6.3 from investment returns of almost $50 million.
Last year BayTrust, advised by Cambridge Associates, made the “courageous decision” to increase its allocation to growth assets to 75 per cent from the previous 60 per cent, chair Rita Nabney said in a statement.
The opportune asset allocation revamp chimed with a record surge in global share markets post the brief pandemic-sparked slump early in 2020.
Nabney said the move helped generate returns of more than 24 per cent for the 12-month period, beating the BayTrust investment benchmark by 4.1 per cent, creating the record $42 million surplus that “has given our Board confidence to lift its expected granting to over $25m for the next three years”.
For the 10 years to the end of March this year, BayTrust reported annualised investment performance of 9.1 per cent against “a return of 8.5 per cent for the passive policy benchmark and an investment objective (inflation+5 per cent) return of 6.3 per cent”, the community trust release says.
During the year the BayTrust board also resolved to shift the portfolio to “fully sustainable and carbon neutral investment” settings by 2030 at the latest.
Both BayTrust and “Cambridge Associates, believe [the change] will be positive for both the planet and the Trust’s long-term investment returns”.
The BayTrust annual report says: “Our view is that looking forward the traditional investment portfolio which has performed well over the last 30 plus years, will not perform as well over the next 30 years.
“Whilst we do not know what the future will look like, we believe moving to a more illiquid, low carbon and truly sustainable portfolio, will best position us to align with our values and maximise returns to our community over the long-term.”
Alastair Rhodes, BayTrust chief, said the organisation would further its ‘impact’ investments as well, adding $10 million to a community housing project, for example, while looking to implement climate change initiatives in the region.
“As a philanthropic, BayTrust has significant flexibility to help local communities understand and mitigate their climate change impacts, as well as grasp opportunities through its internal actions, its investments and its community support,” Rhodes said in the release.
The BayTrust 2021 report shows impact investments grew to $4.2 million during the year compared to $1.8 million in 2020 with a further $11 million earmarked for the sector. At the same time the trust increased its allocation to private equity to almost $21.5 million, up from $13.1 million last year.
Among the $30 million plus or committed but-not-yet-allocated BayTrust private equity and impact investments include almost $4.7 million for the Australian Infrastructure Capital Group and $4.3 million for the NZ-based Purpose Fund.
BayTrust lowered headline costs steady over the year to just over $1.5 million including $403,000 in ‘portfolio management and advisory fees’: other underlying investment costs would be deducted from returns.
The BayTrust report is the first to emerge in the wake of a largely debunked University of Otago study (produced in a data partnership with mostly passive investment manager, Simplicity) that accused the community trust sector of “[destroying] $127.9 million in value” over the three years to the end of March 2020.
