Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ Meat Board chases higher returns from $70M of funds

NZ Meat Board chases higher returns from $70M of funds now held in term deposits

By Jonathan Underhill

May 25 (BusinessDesk) - The New Zealand Meat Board will increase the risk profile of its $70 million of reserve funds, adding shares to what is now mainly held in term deposits in a bid to lift returns.

The shift to a balanced portfolio is aiming to achieve a return of at least 3.3 percent "after all investment, funds management and custodial costs, inflation and any tax drag" are deducted. It generated interest income of $2.3 million in 2017, a yield of 2.95 percent, according to its annual report.

The board has been risk-averse and intent on preserving capital by making the lowest risk investments. As a result, it held about $69.9 million of its reserves as term deposits as at Dec. 31, of which $54 million was parked in New Zealand and $19.8 million in overseas term deposits. Another $4 million was held in local bonds. A conservative approach may not be ideal for an organisation with a time horizon of more than 15 years and a mandate "to maximise investment returns within reasonable and prudent levels of risk."

But that's going to change. After consulting stakeholders and hiring investment advisers Cambridge Partners, the board is moving to a balanced portfolio - adding shares which have the potential to deliver capital gain and dividends alongside fixed-interest investments, where the capital is preserved. The new portfolio will be 50 percent growth assets including local and offshore shares and property alongside NZ cash and fixed interest.

And there's a banned list - no investment in makers of cluster bombs, nuclear weapons or anti-personnel mines; no commodities, no junk bonds, hedged fund or private equity investments; no structured debt or preference shares; and no leveraged investments, derivatives, unlisted equities or limited partnerships. It is also forbidden from short-selling or margin trading.

"The new investment strategy should allow NZMB to achieve improved returns on the funds for only a little more risk and see reserves grow into the future while also providing for enhanced industry good funding in the medium term," the body says on its website. At the same time, the board's reserves policy is to be amended to adjust for inflation, ensuring the capital isn't eroded that way.

Chair Andrew Morrison said Cambridge Partners is now assisting the board to select a fund manager for the $70 million mandate.

Of that total, $57.7 million is held as a contingency fund to cope with industry emergencies, leaving a general reserve which includes funds for 'public good' research such as the Red Meat Partnership. It also includes an investment fluctuation fund of $2.5 million to account for foreign exchange movements.

The board manages the allocation for quotas in three export markets, registers meat exporters and manages reserves in the interests of livestock farmers. The board will review its reserves policy every three years.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Manawatu-Whanganui Projects: PGF Top-Up To Rural Broadband Roll-Out

The government has effectively raided the $3 billion Provincial Growth Fund to top up the budget for the second phase of its rural broadband initiative, filling in mobile 'black spots' and ensuring broadband is available to marae that don't have access now. More>>

ALSO:

Other Windy Cities: Auckland-Chicago Named A Top 10 ‘Most Exciting’ New Route

The inclusion of Auckland-Chicago on Lonely Planet’s Where to fly in 2019? The 10 most exciting new flight routes list comes just two weeks before Air New Zealand prepares to celebrate its inaugural flight to Chicago’s O’Hare International Airport on 30 November. More>>

Deadly Strain: ESR Ups Its Reporting On Meningococcal Disease

The increasing number of cases of Group W Meningococcal disease (MenW) has prompted ESR to increase its reporting on the disease to the Ministry of Health. ESR has upped its reporting to weekly. More>>

ALSO:

Very Small Things: "Game-Changing" 3D Printing Technology Launched

New Zealand microfabrication researchers Andrea Bubendorfer and Andrew Best, the co-inventors of a new way of fabricating very small things with Laminated Resin Printing (LRP), are part of Callaghan Innovation’s MicroMaker3D team launching the new patent pending technology in the US this week. More>>

ALSO: