Charity-focused fund manager, Trust Investments, has hired Nuveen for a global ‘green’ bond portfolio in a first-of-its-kind NZ win for the US-based $2.3 trillion manager.
Under the arrangement, the Trust ESG International Bond Fund will allocate an initial $55 million to the actively managed Nuveen Global Core Impact Bond Fund, replacing the incumbent BlackRock index-style, Australia-domiciled strategy.
The underlying Nuveen fund is an Ireland-domiciled UCITS fund “managed by Nuveen Fund Advisors, LLC and sub-investment managed by Teachers Advisors”, according to Trust scheme documents.
Matthew Goldsack, Trust general manager investments, said the Nuveen fund offered a good mix of negative-screening and tilts to “positive impact” companies in line with the group’s environmental, social and governance (ESG) goals.
“It’s difficult in NZ to get a global bond fund that targets an above-index return while also providing strong ESG credentials,” Goldsack said. “Usually, it’s one or the other.”
In a statement, Jessica Zarzycki, portfolio manager of the Nuveen bond fund, said active management was key to achieving the dual-purpose outcomes.
“By funding projects and initiatives through public fixed income markets, we strive to maximise environmental and social impact while delivering attractive total return potential,” Zarzycki said.
Goldsack said the Nuveen-managed bond fund, established as a portfolio investment entity (PIE) in 2020, was also attracting interest from external parties.
“There’s a number of potential investors already doing due diligence on the fund,” he said. “We think it will go well with retail investors.”
NZ third-party fund marketing firm, Heathcote Investment Partners, has also picked up Nuveen as a client.
Nuveen is a little-known brand in the NZ retail market but the institutional manager has some exposure here, for example, through a sustainable investment “relationship” formed last July with Trust Waikato.
However, Nuveen has a large presence in many markets – including an office in Australia – as the multi-asset global investment arm of US pension fund giant, Teachers Insurance and Annuity Association of America (TIAA).
Trust changed from a vanilla global bond strategy managed by State Street to the green-flavoured BlackRock index fund in 2020 as the manager dialled-up the ESG content in its new PIE suite.
The manager swapped from the legacy group investment fund structures to PIE funds partly to broaden its appeal beyond the traditional Trust client base of charities, iwi and church-based investors.
Post the Nuveen switch, due to go live from July 1, three of the four Trust asset classes will follow active management strategies with only the State Street-run global equities portfolio in passive mode.
Last month Trust hosted the chief of UK-based ‘faith-consistent’ fund manager, CCLA, in NZ ahead of a potential investment partnership.
“We’ve looking at their global equities capability but we’ve still got a lot to do,” Goldsack said.
He said Trust was also upping its exposure to direct property, which represents about $1 billion of the total $1.7 billion managed by the group.