The first big community trust to report for the latest financial period, the $660 million Rātā Foundation, has revealed a major shake-up that has seen underlying management change for more half of its portfolio.
“Over the past year Rātā completed the transition to its new investment strategy, incorporating more growth assets (equities, property, and infrastructure) and less defensive assets (bonds and cash),” the community trust said in a release.
And for the first time, the Rātā annual report discloses underlying funds in a portfolio advised by Mercer with the UK-based Legal & General the largest single manager on the list.
Legal & General manages about 18 per cent of the community trust’s portfolio across three passive global shares mandates awarded by Mercer.
Mercer also looks after almost 16 per cent of the Rātā money, spread across its alternatives and unlisted property multi-manager funds with Harbour Asset Management responsible for domestic assets (cash, bonds and equities) comprising almost 8 per cent of the total portfolio.
Meanwhile, First Sentier Investors picked up the global unlisted infrastructure mandate (5.3 per cent of total funds) as the community trust re-weighted the portfolio to stronger environmental, social and governance (ESG) guidelines.
Leighton Evans, Rātā chief, said in the statement: “This also included a move away from global listed infrastructure, a typically carbon intensive sector, to unlisted infrastructure investments with a stronger focus on renewable energy and sustainable infrastructure.”
The trust also invests about 5 per cent of its assets with Australian private debt manager, Metrics Partners.
Evans said the portfolio overhaul had “paid dividends in the 2021-22 financial year, with our private market investments delivering much of the outperformance versus benchmark”.
Rātā reported a gross return of 7.4 per cent (net 7.1 per cent) for the 12 months to March 31, beating its benchmark by 2.6 per cent and keeping ahead of 10-year performance targets.
In dollar terms, investment returns lifted the value of the Rātā portfolio by $44 million with $20 million plus paid out in grants and a similar figure kept in reserves.
Like most community trusts, Rātā has dialed up ESG investment targets in recent years, adding new layers of analysis (such as carbon exposure reporting) as well as changing underlying managers.
“More specifically, we are becoming increasingly focused on measuring our investment portfolios alignment with the United Nation’s Sustainable Development Goals, and comparing this to similar analysis undertaken in 2020,” the 2022 annual report says. “We expect the changes we have made to the portfolio to have had a positive impact on this analysis, which we will report on next year. Rātā remains committed to maintaining the strong position it is now in and continuing to improve over time.”
For the 10 years to the end of March, Rātā – formerly known as the Canterbury Community Trust – reported annualised net investment returns of 7.6 per cent compared to the benchmark 6.7 per cent.