Written: 05 July 2022

Author: Kirsty O’Hara

4 min read

Let’s unpack Auckland-based boutique investment firm Devon Funds Management

Introducing Devon

With funds under management exceeding $2.5 billion, Devon Funds Management is a reputable option for consideration when selecting funds to invest in.

Devon Funds Management was established in March 2010, when they acquired the respected asset management business of Goldman Sachs JBWere NZ Limited. JBWere had been around in the New Zealand market since September 1984, so the ethos of the company goes back a long way. Devon is part of Investment Services Group (ISG), a group of companies with over $4 Billion under management.

As a funds management business Devon specialises in building portfolios made up of companies listed on the New Zealand and Australian stock exchanges. They also work internationally with Wellington Management, one of the world’s leading independent asset managers based out of Boston, to offer two of the Devon global funds.

The Devon approach to investing is to utilise an active approach – with a focus on research and analysis.

Awards and accolades

The new Devon Global Sustainability Fund recently won ‘Best New Ethical Fund’ at the 2022 Mindful Money Awards. Devon had two funds named as finalists in the awards, including the Devon Global Impact Bond Fund. Over the years Devon has won many awards, including Morningstar and INFINZ awards to name a few, and were awarded the Morningstar Fund Manager of the Year award in the Domestic Equities category in 2015.

Focus on Sustainability

As far as ethos goes, the team at Devon pride themselves on values-based investment strategies. As an organisation Devon, under the umbrella of ISG, is Toitu Enviromark Gold certified.

Slade Robertson comments, that “The Toitu Enviromark Gold Certification cements our ongoing commitment to conducting business in a sustainable way.”

Devon also partners with the Responsible Investment Association of Australasia (RIAA) and speak to an investment methodology where they aim to select holdings that have strong Environmental Social Governance (ESG) credentials.

For investors focused on responsible investing, Devon has two funds with a significant focus on selecting Responsible Investments:

Devon Global Sustainability Fund (Now on Flint)

Devon makes the following comment about the Devon Global Sustainability Fund:

“It seeks to invest in companies globally that generate high return on capital relative to their peers, and whose management teams and boards display exemplary stewardship to sustain those returns over time. Wellington define stewardship as how companies balance the interests of all stakeholders in the pursuit of profits and how they incorporate material environmental, social and governance (ESG) risks and opportunities in their corporate strategy.”

Devon Global Impact Bond Fund (Now on Flint)

Devon also has a Global Impact Bond Fund, which aims to deliver long-term total returns in excess of the Bloomberg Global Aggregate index in NZD (100% hedged). Devon aims to achieve this goal, by investing in a diverse portfolio of global bonds managed by Wellington Management. Devon makes the following comment on this fund in relation to active engagement:

“It seeks to understand the world’s social and environmental problems and to identify and invest primarily in debt issued by companies and organisations that they believe are addressing these needs in a differentiated way through their core products, services and projects.”

Boutique Management Style

Staffed by leading investment professionals, Devon is a unique provider which enjoys a boutique environment free from the bureaucracy of larger institutions.

We admire the fact that Devon staff have ‘skin in the game’ when it comes to their personal investments. Many Devon staff are shareholders, and it’s a requirement that any investment held by staff wherever possible is purchased through Devon’s funds. Devon is independent and wholly owned by its employees and directors, who maintain personal holdings in the Devon Funds, helping to ensure their investment teams make decisions that align with their client’s best interests.

Female leadership is celebrated by Devon, with fund strategist Victoria Harris heading up the sustainability and ESG focus within Devon. Victoria champions conversations around the topic of ESG and impact investing, with a focus on creating sustainability conversations at a company governance level.. For this reason the investing framework that Devon applies is not limited to exclusion frameworks, but also encourages the team to look for companies where ESG is implemented at a corporate governance level.

Victoria comments:

“Social change used to be on the margins. Now it’s mainstream.

We’re seeing a renewed focus on environmental, social and governance (ESG) issues in the financial markets.”

Investors

Devon currently manages investments on behalf of a diverse range of leading New Zealand clients, including: the New Zealand Superannuation Fund; Charities; Community Trusts; KiwiSaver schemes, and corporate pension schemes alongside managed funds for individual investors. With over $2.5 Billion in funds under management, we are glad to be able to offer Devon funds on Flint.

Active Investing Style

An active management style means Devon strategists use research and analysis to inform holding decisions for Devon funds. If you’re unfamiliar with the ins and outs of active investment management, then head on over to the Flint article where we unpack ‘Active vs Passive’ investing.

Devon often asks: how can investors “do well by doing good”? It is commonly acknowledged within the industry that passive investing is unlikely to play an ‘active’ stakeholder role towards improving ESG from within a company. Passive investment styles don’t have the same opportunities to divert cashflow away from non-ESG-compliant businesses. Devon likes to think that through active management, they can reward those companies that are proactive and progressive, with a receptive attitude to ESG.

To deep dive into the philosophy used at Devon, we note that they encourage investors to consider that active strategies can also be “active” in a much broader sense. They raise an interesting point that an active manager may have the potential to ‘move a needle’ and be active in encouraging much needed governance from within an organisation.

Performance

Devon believes that over time good active managers can outperform their underlying indexes. Devon Managing Director Slade Robertson makes the following comment on active investing:

“Active investors are by definition much more nimble, and can adapt to a world where change is happening at an extraordinary rate and the implications of these disruptive forces can create major challenges for all investors. In such an environment surely those that understand the relationship between fundamentals and price stand a better chance”.

Good returns publication suggest that the benefits of an active investment style are demonstrated in the performance of Devon funds.

Devon Funds available on Flint

We’re thrilled to have Devon onboard Flint and the investment possibilities that Devon provides Flint investors. As of May 2022, the following Devon funds are available on Flint:

• Devon Alpha Fund
• Devon Australian Fund
• Devon Diversified Income Fund
• Devon Dividend Yield Fund
• Devon Global Impact Bond Fund (NEW)
• Devon Global Sustainability Fund (NEW)
• Devon Sustainability Fund
• Devon Trans-Tasman Fund

For information on each fund including a fund’s asset focus, geographical focus, fund performance and fees head over the Flint platform and take a look. We’d encourage you to have a deep dive into the Devon funds on the Flint platform! Check out each of the Devon Product Disclosure Documents for further information on Devon funds.

Happy investing!

Flint

IMPORTANT NOTICE AND DISCLAIMER:

All content shared is of a general nature, current to the time it was penned, and is not financial advice. Before making any investment decisions, please be sure you have completed full due diligence. This should include reading the product disclosure statement (PDS), considering fees and taxation, identifying your time horizons, and understanding the performance history and reputation of the investments you are considering.

Please note: When investing you are not guaranteed to make money (and on occasion you may lose some or all of the money you began with). Seek independent advice to establish if an investment is suitable for your financial situation and long-term wealth generation goals.

References

Devon company profile, Responsible Investment Policy, Good Returns on Devon, Good Returns on Value, INFINZ awards, Morningstar Awards, Toitu Enviromark, Informed Investor ESG series, Informed Investor ESG series.