The $1.7 billion plus Foundation North has removed a hangover from its former investment adviser by moving to a per asset class disclosure model.
“Previously, the Foundation categorised its investments into growth assets, diversification assets, inflation hedging assets, and deflation hedging,” the Auckland-based community trust says in its 2024 accounts. “However, in the current year, an updated asset class classification system has been implemented.”
Foundation North switched to Australian consultant, JANA, at the end of 2020 to replace long-time incumbent, the US-headquartered Cambridge Associates, which had put in place the four-bucket asset classification system.
Under the new approach, the community trust – the largest in the 12-entity sector – breaks down portfolio reporting into 11 asset classes.
“The diversified asset classes aim to provide enhanced risk management and provide greater clarity to users of the financial statements,” the 2024 Foundation North accounts note.
And, in line with earlier community trust results, the Auckland regional charitable fund reported a sharp turnaround in investment performance year-on-year after booking net annual returns of almost 14 per cent – albeit missing its benchmark for the second year in succession.
“The financial year saw strong investment returns in most of our asset classes, predominantly from listed equity markets, infrastructure and alternatives. Our investment return for the year was $217.78 million (2022-23: negative $52.19 million). This translated into a return of 13.9 % net of fees (2022-23: -3.2%) relative to the portfolio benchmark return of 19.5% for the financial year (2022-23: -1.2%),” the report says.
“The Foundations [sic] private equity exposure posted a positive return, although it was below its benchmark. This resulted in overall benchmark under-performance of the portfolio for the year by 5.6% (2022-23: -2.0%).”
Since inception about 25 years ago, the fund has returned an annualised 7.8 per cent net of fees versus the benchmark 6.5 per cent and 7.4 per cent for the Foundation North “long-term investment objective” of the consumer price index plus 4.5 per cent.
Total Foundation North assets under management rose to more than $1.7 billion at March 31 this year from just above $1.6 billion 12 months prior.
While asset allocation remained fairly stable year-on-year, the accounts show a relative jump in both global equities and international fixed income. The community trust also doubled its NZ impact fund exposure from about $4.4 million in 2023 to $9 million at the latest count.
Headed by Peter Tynan, Foundation North also saw administration costs rise to almost $10.6 million compared to just under $9.2 million in the 2023 period – driven largely by increases in staff, building/IT and ‘other’ costs.
Elsewhere last week, the Christchurch-headquartered Rātā Foundation also reported stronger year-on-year investment performance, knocking out gross annual returns of 12.8 per cent against the benchmark 11.2 per cent.
Last year the-now $685 million Rātā, second-largest community trust was one of the few in the sector to turn in a positive result – up 2.9 per cent (gross) versus the benchmark 2.5 per cent.
According to the 2024 accounts, over “the last three years the [Rātā] portfolio has earned an annual investment return of 7.6%, compared to a benchmark of 6.3%”.
“The portfolio is invested in pooled funds managed by 24 investment managers (2023: 27) recommended by the Foundation’s Investment Adviser, Mercer, and approved by the Investment Committee and Board of Trustees.”
More than $190 million of the Rātā portfolio is exposed to unlisted assets across infrastructure, private equity and private debt managers.
The alternative asset manager suite includes Morrison & Co, Metrics, JPMorgan, HarbourVest and the Neuberger Berman Crosswords Fund No. 23.