Foundation North, one of Australasia’s largest charitable trusts, has turned in an above-benchmark performance over the latest 12-month period after failing to beat the index last year.
The $1.4 billion Foundation North, which invests in a multi-manager portfolio devised by Cambridge Associates, reported a net-of-fees return of 6.7 per cent against 5.3 per cent for the, unspecified, benchmark over the 12 months to March 31.
While the private equity-heavy Foundation North portfolio recorded a higher nominal return last year (7.7 per cent) it fell short of the benchmark 8.3 per cent.
“As a long term investor however, the Foundation also considers long term performance and the five-year performance was 7.8%, favourable to the five-year benchmark of 7.2%,” the annual financial report says.
Over the year, the Cambridge-advised portfolio held asset allocation more or less steady across its four risk profiles: growth, diversification, inflation and deflation.
However, the return mix deviated significantly year-on-year, the Foundation North report shows:
- income (distributions and yields) fell from over $108 million last year to just under $33.9 million for the 2018/19 period;
- net realised gains jumped to $28 million compared to a $17.8 million loss last year;
- net unrealised gains also rose substantially from $6.7 million in 2017/18 to $28 million the following year; and,
- the fund booked forward exchange losses of almost $6.2 million this year against gains of $2 million 12 months before.
The fund invests in about 30, unnamed, managers selected by Cambridge with about a third of total assets allocated to private equity.
According to the Foundation North report, the charitable trust (formerly known as the ASB Community Trust) has committed almost $440 million to private equity managers split among: US – $309 million; Australia – $81 million; Europe – $33 million; and, NZ – $20 million.
In spite of the broadly similar dollar returns over the 2018 and 2019 reporting periods – of $99.2 million and $93.5 million, respectively – the Auckland-based charity cut grants by about $11 million year-on-year. Last year Foundation North paid out $48.7 million in grants compared to $37.6 million over the most recent annual period.
Other expenses also jumped from about $9.1 million in the 2018 report to almost $9.9 million the following year, fueled mainly by increases in administration and fund management costs.
Overall employees costs rose to $3.7 million against $2.9 million last year. Post balance date, long-time Foundation North chief, Jennifer Gill, retired with her replacement, Peter Tynan, officially stepping into the job early in August.
Like most of the 12 community trusts, Foundation North has seen significant turnover in trustees over the last year. In the latest batch of trustee transitions, incumbents Lyn Lim (chair), Alastair Bell (deputy chair), Toni Millar and Precious Clark vacated in favour of Naisi Chen, Maxine Shortland, Vanushi Walters and former AIA NZ chief, David Whyte.
BayTrust, another of Cambridge’s community trust clients, also filed its accounts recently, booking a deficit of about $900,000 over the 12 months to March 31 after a “soft revenue performance”.
The Tauranga-headquartered trust reported annual investment returns of $7.6 million on assets of $212 million – less than half the 2018 result of $15.9 million. BayTrust replaced Russell Investments with Cambridge in April 2018, completing the portfolio transition mid 2019.
“This year we have been working with Cambridge Associates to further diversify our investment portfolio to ensure it provides solid and sustainable returns for our communities into the future,” the BayTrust report says.
Under Cambridge advice, BayTrust lifted exposure to growth assets from 53 per cent to almost 60 per cent.
“During the year the Trust also increased its commitment to
BOP [Bay of Plenty] Impact Investments where we were looking to drive measurable social impact alongside a financial return from 3% to 6% (1% currently invested) and we were actively looking at opportunities in this space,” the report says.
Portfolio management and advice fees rose slightly from $340,000 in 2018 to $387,000 a year later while other admin costs dropped from $938,000 to $924,000 over the same period.
BayTrust dipped into its almost $64 million grants reserve fund to cover this year’s deficit to maintain its annual donation target of $7 million.