The vast majority of Treasury's investment exposures to Fixed Income corporate (financial and non-financial) securities, Fixed Income securitised securities, money market securities and cash are held with one investment manager in an actively-managed cash enhanced or cash plus mandate. The Fund invests in Australian overnight cash facilities, term deposits, bank bills, negotiable certificates of deposit and short duration floating-rate debt securities and asset-backed securities including mortgage-backed securities.
As a signatory to the PRI the investment manager has recognised the importance of ESG issues for many years and the potential impacts they may have on the overall credit quality of the portfolio. The management of these assets by the investment manager is focussed on capital preservation, credit and liquidity risk. The investment manager considers ESG issues throughout the credit selection process to recognise the potential for an ESG risk to negatively impact creditworthiness and liquidity. ESG considerations are integrated in the security selection process and are considered in the context of broader issuer factors such as business, management and industry risk. Active consideration of current and emerging ESG issues is consistent with their investment philosophy of maintaining a capital preservation bias by avoiding issuers that may suffer credit quality deterioration.
The management of these assets is based on prescribed investment limitations, duration limitations, and issuer limitations including single and aggregate exposure limitations, as well as credit rating (both short and long term) and credit exposure limitations.