5 questions for the new owners of Castle Point

Perpetual Guardian recently acquired boutique fund manager Castle Point. Good Returns catches up with Perpetual Guardian's chief investment officer, Tim Chesterfield, to find out what, if anything, will change.

Monday, July 1st 2024, 9:55AM

Tim Chesterfield is the long-time CIO of the Perpetual Guardian Group and the founding CIO and Director of its investment management business, PG Investments. This year, in line with its strategy to continue to grow organically and by acquisition, the Group has made two key purchases, first buying the Private Wealth division of Trustees Executors Limited in February, and in June acquiring Castle Point Funds Management Limited and its more than $300 million in funds under management.

The acquisitions mean Chesterfield is at the helm of the investment wing of a Group with $2.6 billion in funds under management, and $8 billion in total assets under management – and he is more focused than ever on what is required to maintain PG Investments’ excellent track record and further hone the offer to investors, including this year’s new entrants.

Tell us about your career and experience in both wholesale/institutional and retail investment management?
I began my now nearly 35-year career as a global equity investor in institutional investment out of London. I migrated from European to US equity investment and then moved to Australia in 2006 to spearhead the US investment portfolio of QBE Insurance, where I managed US$1.5 billion of US equities and led a global equity team overseeing more than A$5 billion.

In 2011 I moved away from institutional investment management and into retail, because I found I wanted to achieve real, long-term outcomes for individuals, and see how my efforts translated into improving other people’s financial situations. It is a different level of accountability than the black box, P&L focus of institutional investment.

In fact, it was my daughter who spurred some of this change when she asked me, “Dad, what do you do for a living?” I showed her an Excel spreadsheet that just had a whole lot of numbers on it and she said, “That’s a bit boring.” I laughed, but I saw my work through her eyes – she cares very deeply about people, not boxes or cells with numbers, and that was part of the impetus for me to move to AMP Capital and set up what the business had never had before, which was a direct investment proposition with individual portfolios and differentiated funds and strategies. Investment work focused on people, in other words.

I was brought into Perpetual Guardian Group at its founding in 2014 to revisit the investment strategy and bring in my institutional and retail investment experience. There are no shortcuts to successful investing, and I advocate for a consistent, long-term, disciplined approach to asset allocations. I am proud to lead PG Investments’ dedicated team of investment professionals committed to achieving optimal client outcomes.

What is PG Investments, what are its core services and what is its performance track record?
PG Investments is a dedicated team that specialises in providing clients with easy to use, innovative investment strategies through the dual approach of dynamic, high conviction investments for more focused growth opportunities and index investments for foundational stability. Used together or as single components of an investment strategy, our funds offer a flexible approach to investing.

Our High Conviction Fund, which is a concentrated investment portfolio to deliver on our best ideas, has been in play since 2016 and over the medium and long terms it has done exceptionally well for our clients, with a five-year return of more than 12% per annum. By its nature it can be a little volatile, which is why it forms part of our overall strategy and not necessarily the entirety.

To create new avenues for investors and advisors, we recently launched two new funds: a global alternatives fund in conjunction with BlackRock to offer investors uncorrelated global investment exposure with daily liquidity and which helps in diversifying portfolio risk; and an Income Opportunities Fund. These form part of our core satellite approach that we have also made with our High Conviction Fund.

Importantly, all of our investment offerings can be used as a single diversified solution or as a part of any type of asset allocation, whether that be internal or externally driven.

Why did PG Investments acquire Castle Point and what benefits will Castle Point investors see out of this transaction?
We bought Castle Point for many reasons, but primarily because we believe our combined approach to investment management will significantly benefit existing Castle Point investors. Castle Point has a great team and a fantastic investor base. The Castle Point and existing PG Investment teams have complementary skills which we believe will provide additional depth and capability to our clients. This expanded capability leapfrogs us forward in our approach to bring great investment management to more New Zealanders in a robust and disciplined way. It is a great opportunity to bring a combined approach out into the open and to provide access to our investment strategies to all investors, whether they be individuals, advisors, or trusts.

Will there be any changes for Castle Point investors? Will the investment strategy change under your leadership?
In essence, the Castle Point acquisition means the two existing teams are brought together to apply PG Investments’ robust, rigorous investment approach alongside Castle Point’s unique investment thesis. We are aiming to stabilise and improve investment returns for Castle Point investors, after a rocky time pre-acquisition, by bringing our special capabilities and experience alongside those of Castle Point.

Our funds offer a focused approach to delivering growth in a controlled environment. All of the investments sit within a holistic, disciplined strategy. This holistic discipline is probably the major difference Castle Point investors can expect to see.

Beyond that, we have a special point of difference in that we stay in closer touch with our clients than most investment managers do – so investors coming in from Castle Point will be informed about ongoing strategy changes. They will be given plenty of insight into what is going on in the market and their portfolio, why we are making the calls we are making, and what the value is to them. This does set us apart somewhat and we believe it will be valuable to Castle Point investors.

What about the Castle Point founders and team, are any staying as part of PG Investments?
Yes, there is a great deal of capability and experience in the Castle Point team and strong client relationships. We are pleased to have a number of team members and founders staying with us under the PG Investments umbrella.

PG Investments announced it had adopted index provider FTSE Russell’s climate change index based on the transition pathway initiative (TPI) into its Australasian focused funds – will this be applied to Castle Point’s funds?
PG Investments and Castle Point have a similar ESG philosophy, although the implementation in relation to climate change and environmental overlay have been different in some regards. Both Castle Point and PG Investments have hard exclusions but seek to avoid excluding good companies with legacy businesses that are changing themselves for the better. This expands the size of the investment universe for us to consider in our framework when selecting companies to include or exclude.

We treat TPI as an additional framework that brings more rigour to our approach and which accommodates the changing landscape as new climate change data emerges. PG Investments uses the TPI approach in both its Australian and New Zealand funds, while for Castle Point we envisage the TPI data will provide a useful overlay and risk management tool.

Tags: Castle Point