Fisher Funds KiwiSaver Scheme Details

History

Fisher Funds is a Fund Manager founded by Carmel Fisher in 1998 and since then has continually grown the fund to include 19 investment professionals, making it one of New Zealand’s largest investment teams. Collectively, the team has over 200 years of investing experience. In 2017, Carmel retired from the company, selling her 51% stake to TSB bank.

In 2018 Carmel Fisher was made a Companion of the New Zealand Order of Merit for her work in building the multi-billion dollar company from scratch. Fisher Funds has won numerous awards over the years, with the latest being the Fund Manager of the Year award in 2016.

TSB is a bank fully owned by New Zealanders and redistributes its income back to the New Zealand community. Founded in 1850, the bank has been around since New Zealand’s beginnings. It was one of the original twelve banks in New Zealand but has remained an independent institution after those eleven banks merged.

Fisher Funds provides a number of services, including KiwiSaver, managed funds, premium services tailored to wealthy individuals, workplace LifeSaver plans geared towards retirement, and financial advice.

✅   New Zealand Based Provider

Size

Fisher Funds manages seven funds under the KiwiSaver scheme and has an AUM of over NZ $2.7 Billion and 140,667 members. 

Awards

2019 INFINZ Awards - Fund Manager of the Year – Bonds

2016 FundSource Fund Manager of the Year.

The Investment team

Mark Brighouse - Chief Investment Strategist

Mark joined Fisher Funds in November 2011 and is responsible for oversight of the investment team and the asset allocation in portfolios. He has been working in the investment industry for 24 years, including five years in London.

Prior to joining Fisher Funds, Mark spent four years as Managing Director of Brook Asset Management. Before that, he was Chief Investment Officer for Arcus Investment Management which was part of the AXA Group.

Sam Dickie - Senior Portfolio Manager

Sam started on the Fisher Funds investment team in March 2017 as the Senior Portfolio Manager for New Zealand Shares and Property & Infrastructure. He previously held roles at Moore Capital in Hong Kong and Bennelong Asset Management in London

David McLeish - Senior Portfolio Manager

David joined Fisher Funds in January 2011 as the Senior Portfolio Manager responsible for managing our fixed income and cash portfolios. David began his career in 1999 as an equity broker before moving to London in 2002 where he specialized in fixed-income investments. His previous work experience includes senior fixed income trading and sales roles at Morgan Stanley, UBS, and Goldman Sachs.

Brent Buchanan - Head of Direct Property

Brent joined Fisher Funds in April 2013 as Head of Direct Property and is responsible for formulating the property strategy to maximize returns, securing new equity from investors and maintaining the Trustee relationship. Prior to Fisher Funds, Brent spent five years with TOWER Investments, and prior to that, he spent 14 years with AMP Capital Investors purchasing and developing significant retail, CBD office, and prime industrial property throughout New Zealand.

How is the Investment Team Structured?

Fisher Funds manages its funds with a combined management team. Mark Brighthouse, the Chief Investment Strategist, controls the overall management and direction of the funds. The other members, Sam Dickie, David McLeish, and Bret Buchanan, are tasked with managing and providing advice to the chief strategist in their areas of expertise.

Mark Brighthouse (Chief Investment Strategist) is responsible for the oversight of the fund and asset allocation. Sam Dickie, David McLeish, and Bret Buchanan are responsible for the analysis and management of specific assets within that portfolio, such as fixed income (David McLeish), property (Bret Buchanan), and NZ equities (Sam Dickie). They work together to advise Mark Brighthouse on the optimal asset allocations of the Growth Fund.

Incentives/Alignment

Since all staff of Fisher Funds are part of their Kiwisaver scheme, they are personally invested in the success and growth of the fund. Here’s a statement directly from the Chief Executive Officer, Bruce McLachlan, about the alignment of the investment team in regard to ensuring the success of obtaining returns for customers.

"Our investment team has a very significant component of their total remuneration at stake each and every year, that is tied to their investment performance. The quantum of bonus they receive is directly correlated to their degree of out-performance of the market. We call this alpha generation. No alpha generation, no out-performance, no bonus. Having said this, the motivation to outperform is not just a monetary one. This goes to personal reputation, peer pressure, and a very strong desire to do the right thing by our clients. Many of our team have also invested personally in our own Fisher Funds products"

All KiwiSaver Scheme Providers must ensure they meet regulatory standards and act with customer interests in mind.

KiwiSaver Scheme Managers must exercise care, diligence and skill in the investment of scheme assets, and act in accordance with the stated investment policy and objectives. The FMA monitors that KiwiSaver Schemes are compliant with their obligations. Additionally, KiwiSaver Scheme Trustees also have a responsibility as front-line supervisors for monitoring the management and administration of these schemes.

Fisher Funds Custodian

A custodian plays a key role in protecting your investments. They hold your money and investments (i.e. keep custody of them) on your behalf. So they are the legal holder of your assets while you are the beneficial and ultimate owner.

TEA Custodians Limited (a subsidiary of Trustees Executors Limited) acts as Custodian for the funds' assets and settling agent for the funds' transactions. In international markets where TEA Custodians Limited does not have a presence, they use Citibank or State Street as their custodial agent. They regularly reconcile all bank accounts and investment holdings back to the underlying share registries, so that they know all the assets are real and are held in their name.

Fisher Funds Supervisor

A supervisor is a  licensed entity independent of a KiwiSaver scheme provider that supervises the provider’s management of the scheme. KiwiSaver schemes are trusts, and (except for restricted KiwiSaver schemes) the terms of the trust deed states that the supervisor (or another custodian) must hold all contributions and investments in trust for the investors.

Trustees Executors Limited acts as Supervisor for the funds' investors. Their sole function is to protect the interests of investors. They are responsible for ensuring that Fisher Funds meets its obligations to investors including checking that the funds' investments comply with the SIPO for each fund. Fisher Funds must also provide regular reporting to the supervisor confirming that we have acted in accordance with the relevant Governing Document. Trustees Executors Limited administers and supervises over $100 billion of investors' assets.

Fisher Funds Governance Process 

Compliance with the benchmark asset allocations and prudential limits imposed by the Statement of Investment Policy and Objective (SIPO) is taken into consideration before trades are executed and monitored post-trade. The pre-trade compliance consists of using models that show the resulting asset allocation of the Fund assuming the planned trade is executed.

Portfolio Managers fully understand the prudential limits of the portfolios and take this into account when determining appropriate trades. Each day monitoring is undertaken to ensure the investments of the Fund remain within the limits of the SIPO.

The Manager's Role

The Manager's role is to select investments that best achieve the aims of the Statement of Investment Policy and Objective ( SIPO), to exercise voting powers where appropriate in respect of these investments, to select external managers, to execute transactions to implement the investment strategy, monitoring adherence to this SIPO and reporting on this to the Fisher Funds Investment Policy Committee and the Supervisor, and to make recommendations as to how the SIPO could be improved. 

The Manager is also responsible for appointing any external managers, ensuring they are competent to manage the asset class they are responsible for, and for monitoring their performance on a quarterly basis once they have been appointed. The performance of any external managers is reported to, and recommendations to appoint, or change an external manager are made to, the Investment Policy Committee.

Investment Philosophy

The investment philosophy behind this investment strategy is the belief that broadly diversified fixed interest securities along with a modest weighting to growth assets can provide stable returns over time.

Generally speaking they expect the fund to be actively managed; however they may use passive vehicles to gain broad market exposure. Where they do actively choose stocks they look to invest only in businesses and industries that they know and understand. They invest only after fully researching a stock, and tend to be long term investors. They understand that the market gets valuations wrong from time to time and They rely on their own assessment of value rather than the market's view to exploiting opportunities.

They give each potential investment a score using the following criteria to choose stocks: Strength of the business, Track record, Earnings history, Earnings outlook, People and Price.

Investment Process

Fisher Funds employs an investment analysis model that they call the STEEPP process to analyze existing and potential portfolio companies. This analysis gives each company a score against a number of criteria that we believe need to be present in a successful portfolio company. All companies are then ranked according to their STEEPP score to broadly determine their portfolio weighting (or indeed whether they make the grade to be a portfolio company in the first place).

See below for the breakdown of the STEEPP process.

STRENGTH OF BUSINESS

• What is the company’s competitive advantage?
• Is it sustainable?
• Is the company a market leader?
• Does it have a dominant position?

A strong business is one that can maintain its profit margins by employing a unique strategy.

TRACK RECORD

• How has the company performed in the past?
• Has the company performed under the same management team?
• Has it grown organically or by acquisition?
• How did the company react during a downturn?

Fisher Funds prefers to buy established companies that have executed well in the past.

EARNINGS HISTORY

• How fast has the company been able to grow its earnings in the past?
• How consistent has earnings growth been?

Fisher Funds prefer to buy companies that exhibit secular growth characteristics where they have proven the ability to provide a high or improving return on invested capital.

FUTURE EARNING GROWTH FORECAST

• What is the company’s earnings growth forecast over the next three to five years?
• What is the probability of achieving the forecast?
• What do Fisher Funds expect the company’s earnings potential to be?

Fisher Funds notice that too many analysts focus on short-term earnings. As long-term growth investors, Fisher Funds think about where the company’s earnings could be in three to five years.

PEOPLE/MANAGEMENT

• Who are the management team and how long have they been in their roles?
• Who are the directors, what is their history with the company, and what do they bring to the Board?
• What is the depth of management in the organization and is there a succession plan for the key executive roles?
• Do the management team own shares in the business and how are they rewarded?
• Has the Board and management exhibited good corporate behavior in the areas of environmental, social, and governance considerations?

For Fisher Funds, the quality of the company management and its corporate governance is of paramount importance.

PRICE/VALUATION

• How much of the future earnings growth is already reflected in the share price?
• Where does the current share price sit in relation to our worst to best case valuation range?

A company will generate a higher score where the market price currently reflects little of that company’s upside potential.

For more information about their STEEPP process, please see the link below.

Socially responsible investing (SRI) or Environmental, Social and Governance investing (ESG), also known as sustainable, socially conscious, “green” or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by society.

Basically, SRI investing is investing in companies that have a positive impact on society, based on a number of factors.

Fisher Fund’s Responsible Investment Policy

Responsible investing is something Fisher Funds is 100% committed to and is at the heart of their investment process.

Fisher Funds is committed to investing responsibly. For them, that's about managing your money to generate attractive returns in a way they can all feel comfortable with. They are a signatory to the Principles for Responsible Investment and have a Responsible Investing Policy that touches on every element of their investment process.

They take a two-pronged approach:

Across all their portfolios, including their KiwiSaver schemes, they ensure that the products or services provided by the companies they invest in can be used responsibly and don't cause widespread harm. This means they won't invest in manufacturers of tobacco, weapons that cause indiscriminate and disproportionate harm, including nuclear armaments.

They then go a step further and ensure the companies you invest in meet basic standards of good corporate conduct. To do this they supplement their own research with insights from leading global researcher MSCI. This research gives them more insight to better understand the severity of any questionable behaviour.

They believe responsible investing is not just the right thing to do but also a wise thing. As an active manager, this additional research enhances their investment process helping us select companies that are sustainable from an environmental and social as well as financial perspective. This is something passive funds don't do.

For more information about their Responsible Investment Policy, please see the link below.

Ethical Exclusions

The list of companies that Fisher Funds excludes, from their investment criteria, can be found on their Responsible Investing Company Exclusions List, in the link below: