Medtech key to new funds on InvestNow

InvestNow, has added new funds from Milford Asset Management and Salt Funds to its KiwiSaver line-up to help investors diversify manager risk.

Thursday, August 3rd 2023, 4:27PM

by Andrea Malcolm

Listing the Milford Aggressive Fund and Salt Sustainable Growth Fund platform, brings the number of InvestNow schemes to 40 funds from 15 different managers.

The Milford Aggressive Fund, which is all equities (around 70% global and 25% local) will sit on the platform alongside Milford’s Growth Fund.

During an InvestNow fund manager panel Milford’s Stephen Johnston said the fund follows a thematic style.

“We are looking for where the tailwinds are blowing the strongest. There are megathemes; our Aussie team talks about the three Ds: demographics (the ageing population), decarbonisation, which is driving an investment boom, and deglobalisation. Then there are more niche subthemes like precision agriculture and the cashless society.”

The Milford Aggressive Fund has broad exposure to the transformational healthcare subtheme, said Johnson, with the investment team boasting a former medical doctor turned analyst.

Ageing populations

“It’s a play on demographics which transglobally, is one of the biggest trends. By 2050 the number of over 65s will more than double, and there will be more grandparents than grandkids.

“We also like the level of innovation going on in the sector. Steve Jobs said in one of his final predictions that the intersection of biology and technology will lead to some of the biggest innovations this century.”

On this premise the fund includes medtech company Boston Scientific. Johnston said despite the company being hurt by mass postponement of hospital procedures during the pandemic, it is now dealing with pent up demand. Other holdings include US health insurers, private hospitals and pharmaceutical companies.

Salt analyst Greg Fleming said the health tech theme is also crucial to the Salt Sustainable Growth Fund.

“As well as the ageing population it comes from unsustainable health systems and productivity challenges in the global health system,” he said. “Arguably AI can address some of that but we will need some thorough reforms in some national health systems to allow AI to come on board.”

As an Australian and New Zealand specialised house, Salt had the luxury of starting with a clean sheet of paper when it came to constructing a global diversified fund. It brought on board Morgan Stanley Investment Management and New York-based Cohen & Steers as underlying managers for its global strategy.

Renewable energy

Fleming said sustainability in the fund refers to carbon footprint with the global equity fund 85% lower than the MSCI World for the emissions intensity and the bond fund around 82% lower than the index.

“It pushes you into certain sectors by definition and out of certain sectors like energy and materials mining, meaning you get quite a specific universe. When Morgan Stanley identifies companies they have to have good compounding revenue stories in the sectors that are acceptable for investors. Also a wide range of metrics over governance on labour standards to minimise risk of headlines, regulation or stranded assets. Given the timeline of five years plus it doesn’t matter if you drift away from the more index tracking vehicles.”

Fleming said although not seeking energy stocks, it has exposure to the sector through its infrastructure fund vehicle around renewable energy transitioning.

“We invest in managers and companies on a credible path towards greening their output and supply chain right through up to scope three.

“They are quite concentrated portfolios. There is a relatively small numbers of securities, 250 in the global bonds fund compared to 20,000 for the index and around 41 individual equities in the global shares fund so it’s easy for managers to engage with companies and Morgan Stanley gets access to C-level decision makers, so we’re confident we’re getting real data in real time on engagement and its outcomes. When we look at the engagement reports that come through to us, a lot of its follow up checking rather than initial interaction.”

Milford Aggressive Fund has a 1.15% p.a. fund management fee and the Salt Sustainable Growth Fund has a 1.12% fee.

Other fund managers accessible on InvestNow are Pathfinder, Fisher Funds, Generate, Harbour, Mercer, Antipodes, Castle Point, Clarity, Mint, and Russell Investments. InvestNow also offers its inhouse Foundation Series KiwiSaver product.

Tags: InvestNow