Responsible Investment - Update

Responsible Investment – Mercer Update

We have reviewed our Exclusions Policy as it relates to controversial weapons and have now broadened our exclusion list.  The exclusion list extends to companies manufacturing controversial weapons such as cluster munitions, landmines, chemical or biological weapons, or nuclear weapons.  Previously the policy only excluded cluster munitions and landmines.

We understand how important ethical investing is to our customers, so our review is thorough and ongoing as we are continuing to consider other possible exclusions. We are taking into account investment risk and return implications as well as other factors which may impact our investors in the short and the long term.

While some our investments are directly managed, which means we have full control over the exclusions, our review also extends to the feasibility and cost of certain exclusions for indirect investments in co-mingled investment vehicles and exchange traded funds. 

We will provide a further update in the first quarter of 2017.

Our earlier update is below.

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We understand that some of our customers are interested about the various types of investments held by the Mercer-managed schemes and how their own savings are invested.

Mercer is committed to complying with all the relevant laws of New Zealand and appropriate ethical standards, and, if you are a KiwiSaver member, to the default KiwiSaver provider criteria.

We can report that we have no direct exposure to companies which manufacture cluster munitions or land mines.

We believe in taking an investment view that goes beyond traditional financial analysis and consider a wide range of risks and opportunities to create and preserve long-term investment capital. We consider factors that support sustainability, such as good governance, consideration of environmental and social impacts on assets, as well as the associated policy and regulatory implications.

You can read our Sustainable Investment Policy here.

Mercer’s investment management style


As a manager-of-managers, Mercer selects specialist investment managers for each sector, thereby delegating the selection of securities to those managers.

We have more than 100 staff involved in manager research which allows us to track over 5,400 managers and more than 26,000 investment strategies across the globe. Each investment option is carefully constructed and we monitor every manager on behalf of our investors.

Within our global shares portfolio, we mostly engage managers by way of an investment management agreement, which allows Mercer to specify the investment policy. This policy requires managers to exclude companies which manufacture controversial weapons.

Our funds also invest in other pooled funds to increase diversification and investment efficiency. This includes investment in exchange traded funds (‘ETFs’), which provide cost-effective access to a basket of securities set by the relevant index.

In these circumstances, the managers of the underlying funds set the guidelines for these funds and, as such, the exclusions which we apply elsewhere may not occur at this level.

To address the potential for unintended, indirect exposures to excluded companies identified within our policy, we have initiated a review of our current approach. The key objective of this review is to further strengthen our ability to control the exposure to specific sectors and companies. Our review may also consider whether to exclude any sectors additional to the controversial weapons referred to above. 

Investment choice


As with any investment it is important that it is suitable to your personal circumstances. It is important that you seek advice from an appropriately authorised financial adviser.

We will continue to evaluate options available to you.  More information about the options can be found online at www.mercerfinancialservices.co.nz or on the disclose register.

Other resources

We are transparent about how and where we invest. You can find information about each of our managers and the underlying companies on the disclose register managed by the Financial Markets Authority. We encourage investors to take an interest, review their own investment choices and ask questions about where and how their money is invested.

Jargon Busters


Exchange traded funds

An investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day.

Index

A benchmark return used to measure performance. For example, the NZX 50 is often used to measure the performance of New Zealand shares.

Pooled funds

Funds from many investors (individual and corporate) put into a large fund spread across many investments and managed by other professionals. This way of investing means that you don’t buy shares directly in companies, but are exposed to these indirectly through pooled funds.   

Securities

A general term applied to all shares, debentures, notes and bonds.


For more terms used in this update please read ABC’s of useful terms.

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