Key points
- Council is divesting from Janus fund, as it cannot confirm its investments are legally compliant,
- Draw-down of the diversified assets portfolio is part-way done,
- Incoming Elected Members to advise how council invests its funds in future.
Auckland Council is part-way through the sell-down of a legacy financial asset portfolio, with the incoming council to decide how best the city’s funds are invested.
In May 2016, the council’s Governing Body approved the partial liquidation of the fund, called the Diversified Financial Asset Portfolio. Approval was given to council staff to draw-down up to $100 million in the 2016/17 financial year, followed by a further $100 million in the 2017/18 financial year.
The first draw-down of $100m has been completed, the council’s Group Chief Financial Officer, Sue Tindal, says. “As at 31 August 2016, the fund totaled $224m and following the 2017/18 draw-down, the size of the portfolio will reduce to approximately $124m.”
“The portfolio originates from funds transferred to Auckland Council at amalgamation,” Ms Tindal explains. “The individual funds within the portfolio provide regular reporting to to Jana - the council’s fund manager.
“We have instructed our fund manager to identify a new growth fund to invest in which is compliant with all legislative requirements and council’s current investment policies,” she says.
The portfolio of financial assets includes investments in a wide range of shares, bonds and other assets including companies associated with fossil fuels and similar investments.
“As part of this process we continually look to align our investment policies with best practice. Fund managers are required to act consistently with legislative requirements and the council’s Responsible Investment Policy.
“Our investment policies are reviewed regularly,” Ms Tindal says.
“We have certain confidentiality restrictions with some of the funds which inhibit our ability to disclose specific asset holdings however we have made the decision to divest from the Janus Global Fund. This is due to Janus being unable to confirm whether the council’s funds are invested with legally-compliant activities; this divestment will take place over the coming month,” Ms Tindal confirmed.
“Once the divestment of the Janus Global fund is complete, we can categorically state that we are compliant and have no funds invested in cluster, nuclear or other prohibited munitions. All other funds have provided Jana with appropriate confirmation of compliance.”
Ms Tindal says that divesting from the Janus fund will not negatively impact the council, financially
Investing in companies, such as Coca-Cola and British American Tobacco, while not illegal, may not be consistent with the council’s operational approach on sugar-laden drinks, which are in the process of being removed from council-run leisure centres, and the smoke-free policy.
The incoming council will be presented with a report with the aim to resolve this aspect and other issues around ethical investments of the council’s investment policy, and will be undertaken early in the new term.