Harbour reanchors its index funds

Harbour Asset Management has made changes to its index funds reflecting changes in the market

Friday, March 5th 2021, 7:19AM

The Wellington-based manager has reviewed its low-cost New Zealand index tracking equity funds and made changes based on investor feedback.

One of in outcomes of these changes is a based on a view that value investing is unlikely to make a comeback anytime soon.

Currently, the Harbour NZ Equity Advanced Beta Fund largely (70%) tracks the S&P/NZX Portfolio Index with an overlay of Environmental, Social and Governance considerations (ESG). The remaining 30% is invested in companies which exhibit characteristics of growth, value and yield.

The value element of this strategy is being removed.

"This fund has not been performing as we would like it to," managing director Andrew Bascand says.

"We are in the midst of a sustained period of technological change and disruption, and many traditional value companies have seen their revenue pools eaten away by industry disruptors. Companies are not performing in the ways which older models might have predicted.

"While value and yield factors may turn around, we believe it’s time to make changes to the portfolio construction process to improve client outcomes and better reach the purpose of this fund, which is to provide low-cost exposure to the New Zealand equity market."

Under its new strategy it will passively track the S&P/NZX Portfolio Index.

Also the management fee on this fund will drop from 45 basis points to 20 points.

When the changes are made at the start of April the fund will be renamed Harbour NZ Index Shares Fund.

Later in April Harbour plans to launch the Harbour Sustainable NZ Shares Fund.

"After over a decade of focus on responsible investing and ESG research, we also intend to launch a low cost ESG fund," Bascand says.

"The Harbour Sustainable NZ Shares Fund will also track the S&P/NZX Portfolio Index, however we will exclude large carbon emitters, alcohol, gambling, munitions, adult entertainment, nuclear armaments, firearms, child labour, and companies with human or animal rights violations. It will also incorporate positive and negative ESG tilts over the remaining companies, to include a larger weighting of companies which perform well in our proprietary ESG scoring, and less of those that do not."

The fee for this fund will be 0.25%pa.

"We’re excited to be broadening our product range with these options. They will be great tools for investors building diversified portfolios, who want exposure to local equities at a relatively low cost," Bascand says.

« Alternative capital pathways on the up: FMA reports

Mann on a mission to diversify financial advice »

Special Offers