AE Investor is a Unit Trust that issues units when you invest your money.
Your return comes from the growth in the unit price.
These features are explained below and are unique to AE Investor
Other Features
- It is USD denominated.
- Its value can increase or decrease as it participates in all its investments.
- It is a capital growth fund.
- It is a portfolio investment entity
- It incurrs PIE tax on its taxable income (if any)
AE Investor is a USD denominated managed investment fund that invests in up to 50 US stocks listed on the New York Stock Exchange (NYSE), Nasdaq or Cash, which may be held in either USD or NZD. The fund has a high level of volatility.
When you invest in AE Investor, your money buys units in AE Investor. Each unit you buy will have a price calculated each day, by the unit registry, based on the value of AE Investor assets at the time. Changes in the value of AE Investor’s assets are reflected in the daily unit price (as they can fluctuate up or down).
The number of units you hold, when multiplied by the unit price, gives you the total value of your investment (the impact of PIE tax can result in a change in the number of units you hold, up or down).
The return on your investment comes from any increase or decrease in the unit price at the time you redeem the investment.
The value of each unit can vary (both up and down) daily.
AE Investor is a portfolio investment entity (PIE).
Compliance with the mandate is checked each trading day.
Strict ethical mandate
Ethical Mandate
Up to 50 equities, being ordinary shares listed on the NYSE or Nasdaq and cash; USD or NZD.
Equity investments to be in companies with strong balance sheets that meet the financial ratios:
- Interest-bearing debt less than 30%.
- Interest-bearing investments less than 30%.
- Illiquid assets greater than 33% (i.e. they are assets making or doing something for the good of humanity that exceed 67% of total assets).
Prohibited activities:
- Products whose return is based on receipt of interest, including money lending*.
*Explanation: this excludes all financial institutions, Banks, Money Lenders and Insurance Companies. - Gambling and speculative investments*
*Explanation: this is not just a prohibition of gambling organisations like casinos, but also excludes high-risk investment products that rely on chance for success, eg. hedging products. - Derivatives*
*Explanation: these are a high-risk product that rely on chance for success(gambling). - Alcohol
- Tobacco
- Weapons of war.
- Adult entertainment.
- Gold and Silver hedging.
- Pork*.
*Explanation: This limits the investment in meat-based businesses. - Leverage* (i.e. borrowing against investors’ (your) money, not assets).
*Explanation of leverage: Leverage is a practice of many fund managers. Leverage puts your investment at an unethical risk. Leverage is absolutely prohibited. - Fossil fuel exploration.
If an investment breaches the Ethical Mandate, it is sold on the next trading day.
Any cash held in the Scheme is held in US dollar or NZ dollar interest-free bank accounts.
The Ethical Mandate prohibits investment in fixed-return products or derivative instruments.
Non permissible income generated from non-compliant business operations or investments (both operations and non-operations) should not exceed 5% of the total income generated by the company invested in.
Each year the effect of the non-permissible income is “purified” by a donation to the poor.
Purification is calculated by the Manager and AE Investor pays the sum calculated annually to charities for the poor.
Our investment philosophy, strategy, and policies all derive from the Objectives.
When the Investment Committee considers the world economy requires, it actively adjusts the ratio of cash to equities. This changes the risk profile of the fund.
This is a unique aspect of AE Investor that is relied upon by AE KiwiSaver Plan as, unlike other funds where the Investor is required to select the Risk of their investments.
Part of the AE Investor’s investment strategy is to manage volatility by holding a balance of equities and cash. When there is a market event, the intent is to hold a war chest to take up opportunities to deliver long term growth by buying at prices below the future market price potential of the stock.
The combination of these philosophies works as a strategy to the long-term benefit of Investors. AE Investor manages risk (volatility) and provides opportunities for acquiring stock at below the future market potential price.
This impacts our Investors’ Risk exposure. As a helpful guide the table below is taken from the NZ Retirement Commission website www.sorted.govt.nz
Fund – Risk Type | % Equities | % Cash | Growth Balanced Conservative Defensive | 89.9 – 63% 62.9 – 35% 34.9 – 10% 0 – 9.9% | 10.1 – 37% 37.1 – 65% 65.1 – 90% 90.1 – 100% |
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The Manager recommends all Investors treat AE KiwiSaver Plan as aggressive.
AE Investor’s policy of being nimble in its decisions is very important to AE KiwiSaver Plan as it works in the market. Other funds, due to their size, are the market, especially the modern trend of large index passive funds.
An example of how AE Investor changes the risk profile of the fund occurred in February 2020 it reduced its equities holding to under 34% making its risk profile, by definition, a conservative fund (www.sorted.govt.nz). See table below.
Fund – Risk Type | % Equities | % Cash | Aggressive Growth Balanced Conservative Defensive | 100 – 90% 89.9 – 63% 62.9 – 35% 34.9 – 10% 0 – 9.9% | 0-10% 10.1 – 37% 37.1 – 65% 65.1 – 90% 90.1 – 100% |
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⬤ 20% USD or NZD, cash or cash equivalents
As a general guidance the target mix is 80% equities, 20% cash, but this is not to be taken as limiting the Investment Committee’s ability to stay nimble by adjusting the equities/cash ratio as, in its opinion, the market fluctuation requires in order to manage volatility of the fund.
The Manager applies an active management strategy to its investments, keeping the investments within the Strict Investment Mandate.
