Generate gets thematic

The former manager of KiwiWealth's thematic fund has set up a similar retail fund at boutique fund manager Generate.

Wednesday, July 5th 2023, 6:00AM

by Andrea Malcolm

Generate has added two new specialised funds - one thematic and the other Australasian - to its non-KiwiSaver managed funds scheme.The new Thematic Managed Fund and Australasian Managed Fund will join Generate conservative, balanced and focused growth managed funds, which mirror Generate KiwiSaver. They are available for distribution through Generate’s adviser network which includes 35 Generate and 400 third party advisers.

The new thematic fund invests predominantly (98%) in mid- to large-cap international equities, including a number of high-profile global companies, based on investment themes that Generate thinks have high growth potential.

It includes equities such as Nike and Lululemon under an athleisure (athleisure is a hybrid style of athletic clothing typically worn as everyday wear) investment theme, with other themes including AI, waste management and energy transition. It is aligned with Generate’s responsible investment policy and also excludes fossil fuels.

Portfolio manager Nathan Field, who was formerly at KiwiWealth, also runs the thematic wholesale fund for Generate KiwiSaver and says the managed retail fund follows the same strategy.

“While many of the equities within the fund portfolio are household names, the key is that they fit within the investment themes we believe will underpin long-term growth as well as meet the other rigorous investment criteria we apply to all investments. It’s all about active management to achieve our investment objective of delivering a higher return for our customers over the long-term.”

While waste management, energy transition and AI investment themes are ubiquitous, athleisure is a point of difference. Field says he first began investing in athleisure companies at KiwiWealth after observing the ongoing casualisation of workplaces and society.

“Rather than just go into consumer goods, energy and tech, we try and break it down into consumer tastes. Even before Covid people were gradually not wearing suits and ties, working from home more, and abandoning the difference between work clothes and home clothes, as well as adopting more healthy lifestyles.

“I first noticed it in New York; for women the heels had gone and guys were wearing sneakers with suits. It seems to be acceptable business attire now. I can’t see us ever going back.”

The other new Australasian Managed Fund invests in an actively managed portfolio of New Zealand infrastructure and property equities (49%), such as Contact Energy and Infratil, and Australasian equities (49%), plus 2% cash.

Portfolio managers Andrew Bolland and Dan Frost have managed Generate’s Australasian investment strategy and the Australasian portion of Generate’s other funds for the past five years.

Bolland says the new Australasian fund is aimed at people wanting exposure to growth assets with defensive characteristics.

“Our investment approach favours companies that generate sustainable cash flows with attractive growth pathways. These companies tend to be lower risk than early-stage non-profitable growth companies,” says Bolland.

Both funds are PIEs designed to be long-term investments, with a minimum timeframe of 10 years. The minimum initial investment is $1,000, which can be split across multiple managed funds, with minimum regular investments of $100.

Management fees are based on a percentage of net asset value, with each estimated at around 1.29%. The Public Trust is the supervisor for the scheme and Apex the administration manager.

Generate, recently reached $4 billion in funds under management (mostly in KiwiSaver).

Tags: Generate