The cash portfolio is managed in-house based on an investment objective to invest in a range of money market securities, short dated fixed income securities or equivalents. All investments will generally be invested for a maturity generally no longer the 12 months which is dependent on the outlook and interest rate environment. If the circumstances are attractive and an opportunity presents itself, a longer dated investment will be looked at which will not have any significant detrimental impact on the liquidity of the portfolio.
Credit monitoring of the portfolio has recently been established, which focusses on a range of factors that may present potential significant impact on the credit matrixes of an issuer. This also include of ESG factors. Potential litigation, earnings impact and credit rating outlook change of an particular issuer are being considered in the monitoring and decision is formed to adjust the exposure limitation of a particular issuer in accordance to the severity.
All trading must be with an approved counterparty/issuer who are an Authorized Deposit-taking Institution (ADI) under the Bank Act 1959;
Commonwealth or State Government of Australia;
A Public Statutory Body, Corporation or Authority constituted under a law of the Commonwealth or a State and guaranteed by the Commonwealth or a Sate.
Corporations with a short-term rating A1 or better by S&P Australian Rating agencies. The portfolio is not permitted to invest in instruments with a credit rating below S&P's A2 credit rating equivalent.
Our philosophy is that ESG issues can affect the performance of all asset classes. The short-term time horizon of some investors can lead to ESG factors being overlooked, and this may result in losses or missed investment opportunities for these investors over the long-term. However, we strive to quantitatively assess these ESG risks and understand the long-term ramifications on investment markets.
That is why ESG factors and climate change risks are analysed as part of our due diligence process when selecting our external investment managers. Our due diligence includes a demonstration of how an assessment of ESG risks is incorporated into the investment process including the use of positive screens if any. Investment managers must have an integrated ESG approach within their investment policy and framework and have the capability to assess ESG risks within a portfolio. Investment managers are also required to specify the resources they have available to analyse ESG risks, by providing details of internal staff and their expertise, as well as any external research services that are employed. We conduct annual reviews of each investment manager that includes a consideration of ESG initiatives that have been conducted and the level of engagement with company executives and directors. An assessment of each investment manager’s performance against responsible investment strategies and objectives forms part of these reviews.
Investment managers are encouraged to discuss ESG and other risks in their investment reports to the Trustee. We monitor the investment portfolios of the underlying investment managers and analyse the exposure to significant specific risks such as climate change risk. We require our fund managers to consider our ESG Policy and the PRI’s six principles within their company evaluations. Investment managers are also encouraged to discuss ESG and other risks in their investment reports to Vision Super. We directly monitor all investment managers by conducting regular onsite meetings and teleconference calls. Our asset consultant also holds regular meetings with investment managers and all meeting notes are reviewed by our Investments team.
Where possible, agreements with investment managers will specify the ESG evaluation process. All portfolios have specific mandates detailing information such as authorised investments, reporting and exposure limits. Compliance reporting is performed on all mandates daily.
The Trustee has a specific Investment Manager Appointments and Terminations Policy with all selections and appointments consistent with the below overarching frameworks:
- The Investment Beliefs set by the Board and documented in the Investment Governance Framework Policy
- The Investment Objectives and long-term (SAA) strategy set by the Board and documented in the Investment Policy Statement
- The Asset Class objectives and strategies set by the Investment Committee
- Vision Super's Investment governance risk appetite
- Vision Super's Conflict Management Framework
The over-riding principle is that appropriately detailed diligence is conducted, aligned to the complexity and risk profile of the investment with consideration of ESG risks when making a portfolio appointment as set out within Vision's ESG Policy.
In addition, alpha expectations, tracking error, investment style and impact of the investment approach on tax, ESG risk and fees are considered as part of the manager selection and portfolio construction process. The Trustee also assesses each managers’ ESG Policies as part of Vision Super's Manager assessment process.
When making investment decisions, Vision's investment managers must consider the expected return and performance of investments. When making these decisions, The Trustee encourages the consideration of ESG issues which may impact on the long-term performance of companies with the portfolio from time to time where these may materially impact on the performance objectives of the Fund. Often the short term time horizon of investors' means that ESG factors are overlooked, which may result in losses or missed investment opportunities for investors over the medium term. Quantitatively assessing these risks is difficult as the ramifications can take time to work through and spread widely.
We note that while external managers are asked for input, we vote all our shares utilising advise from Glass Lewis and ACSI. We will override these advisors on ocasion when we believe it is in the best interest of our members. All such decisions are reviewed by the Board annually.
Furthermore, we disclose all our proxy voting on a regular basis which is made available on our website after the conclusion of an AGM. As part of our active ownership, the fund also discloses its reporting and assessments in which it participates in as a signatory, member or affiliation with various ESG organisations. See below link to our website under active owenship: