The Funds international investments include international cash, international term deposits, and international listed equities. The total international Portfolio holding as at 31 December 2017 was approximately 15.1% of the Fund.
The Fund has an allocation to international assets of 25.0% as part of its SAA. Within this allocation the Trustees have 10% of the SAA allocated to international bonds and 15.0% to international equities. Due to foreign exchange controls the Fund has not been able to diversify further into international assets in line with the Fund SAA.
As advised in our statement last year the Fund altered its approach to international equity investment by use of what is known as “low volatility” investing and selected 3 global managers to implement this approach. The three (3) new international equity managers, noted below, were introduced to the Fund in 2017 and progressively invested in during the first half of the year. The international equities allocation provided a robust return for the Fund as global markets performed strongly. In addition ongoing PGK weakness meant the international component had the added benefit of providing exchange rate gains for the Fund. Pleasingly the new funds also performed according to their mandates of having volatility lower than the market especially in falling markets, which was demonstrated with the recent market volatility early in the New Year.
Foreign exchange shortages, due to the controls imposed by BPNG, remained a constraint on the ability of the Fund to fully implement its offshore asset allocation in 2017.
International Listed Equities as at 31 December 2017
|iShare Wholesale Indexed International Equity Fund||Global Fund ex-Australian|
|Acadian Global Managed Volatility Equity Fund||Global Managed Volatility Funds|
|Lazard Global Managed Volatility Equity Fund||Global Managed Volatility Funds|
|Robeco Global DM Conservative Equity Funds||Global Managed Volatility Fund|
|Kina Securities Limited||Banking/Finance|
Source: KFM, Blackrock, Acadian, Lazard, Robeco and Kina Securities Limited