Devon Funds has added global assets back on its menu, partnering with storied US firm Wellington Management to launch two new sustainability-themed funds.
Part of the Investment Services Group (ISG), Devon will offer access to international fixed income and equities via the Wellington Global Impact Bond Fund and Global Stewards Fund, respectively, with the first client flows expected this week.
The move marks a return to the international stage for Devon, which closed its Global Themes Fund, managed by the group’s asset allocation adviser JB Were, in June 2020. While the Global Themes portfolio largely followed index strategies, the Wellington international funds are actively managed with a tilt to firms meeting sustainability criteria.
According to the Devon fund documents, the Wellington global equities fund “seeks to invest in companies globally, that generate high return on capital relative to their peers, and whose management teams and boards display exemplary stewardship to sustain those returns over time”.
“Wellington define stewardship as how companies balance the interests of all stakeholders (customers, employees, communities and the supply chain) in the pursuit of profits and how they incorporate material environmental, social and governance (ESG) risks and opportunities in their corporate strategy,” Devon says.
Meanwhile, the Wellington Global Impact Bond Fund invests in debt securities of companies the manager expects are improving “access to, and the quality of, basic life essentials, reduce inequality and mitigate the effects of climate change”.
The Boston-headquartered Wellington traces its “roots back to 1928, when Walter Morgan established the first balanced mutual fund in the United States”, the group’s website says.
Today, Wellington manages over US$1 trillion on behalf of almost 2,500 institutional clients across 62 countries.
Headed by Slade Robertson, Devon has over $2 billion under management including an almost $300 million NZ equities mandate with the NZ Superannuation Fund.
Including the new global funds, Devon offers eight portfolio investment entity products mostly targeting various Australasian equities strategies. The group launched the Australasian shares Sustainability Fund in 2020.
Greg Smith, Devon head of retail, said the firm was currently focused “on building funds with individual asset class strategies” rather than blended portfolios.
“However, we absolutely wouldn’t rule out these then coming together to create diversified fund offerings,” Smith said. “We know the interest in ESG offerings is growing, and we’re keen to develop further solutions that meet the needs of our clients.”
While the new global funds expand the Devon range, the manager has yet to include a local fixed income option to complete the set.
“We remain on the lookout for a New Zealand fixed interest product which is the right fit for Devon and comes with strong ESG credentials given our focus in this area,” he said.
Many NZ investment shops now provide access to global options either in-house or through third-party managers.
For instance, last year fellow Auckland boutique manager, Salt, rolled out a suite of global sustainable-flavoured strategies through funds managed by Morgan Stanley (for equities) and real asset specialist, Cohen & Steers.