Sandhurst Trustees approach to internal governance and asset stewardship
Relevant. Valued. Connected.
This disclosure statement aims to highlight our approach to asset management with respect to FSC Standard 23: Principles of Internal Governance and Asset Stewardship, Financial Services Council, July 2017 (Australia).
Sandhurst Trustees (Sandhurst) is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited (the Bank) and is part of the Bendigo and Adelaide Bank Group of companies (the Group). Sandhurst provides wealth solutions and services to the Bank and it’s customers.
The Bank’s vision is to be Australia's bank of choice. The Bank’s purpose is to feed into the prosperity of our customers and communities, not off it.
Like the Bank, Sandhurst has a strong focus on supporting people, communities and initiatives from which we draw our ongoing success.
Sandhurst was formed in 1888, with a long history of managing financial products for Australian investors. In 2018 Sandhurst celebrated a milestone of 130 years in business. Sandhurst had approx. $5.1 billion in funds under management with over 55,000 customers as at 30 September 2023. The Investment Team has over 60 years of investment experience and our Sandhurst Trustees Board (STL Board) has over 100 years of financial services experience.
As a modern full-service asset manager, Sandhurst undertakes several activities and roles in providing financial products and services to both retail and wholesale markets including:
Sandhurst acts as the responsible entity for a number of registered managed investment schemes and undertakes some of the asset management activities of these registered schemes.
Our investment team leaders, Board and Governance Committees
The Sandhurst Investment Team (Investment Team) has significant experience in financial services including the areas of funds management, treasury and risk management. The Investment Team work closely with other departments within Sandhurst and the Group that provide financial services. These services include lending and custody services. The Investment Team has decision making responsibility for portfolio management and risk management within the Sandhurst governance structure, including the investment policies.
The STL Board consists of both executive and non-executive directors. In addition to its board, Sandhurst has the following governing committees that provide oversight to its day to day operations:
- Audit, Risk and Compliance Committee; and
- Investment Governance Committee.
The STL Board is responsible for setting the frameworks and policies that Sandhurst are governed by. These include the investment governance framework, risk management frameworks, supporting policies and remuneration policy. The STL Board must decide on and approve the composition of the governance committees and their powers. It must take appropriate and timely action regarding information contained in reports to the STL Board on investment matters.
Sandhurst Trustees is fully owned by Bendigo and Adelaide Bank Limited.
Our embedded processes
Sandhurst has an established governance framework and policies which are designed to ensure it applies a sound governance approach, conducts its affairs with a high degree of integrity, and promotes a good governance culture. It is also designed to ensure that business decisions are in the best interests of customers, and that when making decisions the impact on customers is always considered.
All employees are required to comply with the frameworks and policies of the Group and Sandhurst, and to adhere to the highest standards of integrity and fair dealing. Sandhurst is committed to promoting a culture of compliance and ethical behaviour, where all our decisions, actions and behaviour reflect and reinforce our corporate values and purpose statement. We understand that it is important to continually improve outcomes for all our stakeholders.
The frameworks and policies include and are not limited to:
Code of Conduct
The purpose of the Code of Conduct is to ensure that we all have a common understanding of our values and expected standards of conduct. The Code, including our Corporate Values - Leadership, Teamwork, Performance, Engagement, Integrity, and Passion, captures the spirit of our organisation and provides a framework for all of us to use to guide our behaviour and decisions.
The recognition and management of risk is critical to our success. Sandhurst's regularly reviewed risk management framework represents the totality of systems, structures, policies, procedures, processes, and people that the business uses to identify, assess, manage, mitigate, and monitor all internal and external sources of inherent risk that could have a material impact on its business operations or customers.
Sandhurst's approach to risk management is inclusive of several risk areas, including financial risks: credit, market and investment, liquidity risks and non-financial risks: operational, governance and strategic risks. Sandhurst employs the 'three lines of defence model' in order to ensure effective risk management and control. Sandhurst uses many systems to measure and monitor investment risk to ensure alignment between investment returns and the investment objectives and benchmarks of our products.
The STL Board is responsible for ensuring a sound risk management culture and the risk management framework is in place at all times, to appropriately manage material risks to Sandhurst's business operations. It is recognised that all levels of Sandhurst's staff must take an active role in maintaining an effective risk management culture including identification and reporting of any actual or potential risk events.
Our policies set out obligations that are imposed on all employees, contractors, consultants and directors regarding the laws governing the conduct for buying, selling and otherwise dealing in securities. The objective is to ensure the Bank and its representatives are beyond reproach in their dealings in the securities and inside information of the Group and include, as examples, adherence to blackout periods and trading restrictions as well as the forbidding of insider trading and front running.
Speak Up and Whistleblowing
Sandhurst is committed to promoting a culture of integrity and ethical behaviour, where our decisions, actions and conduct reflect and reinforce our corporate values. We understand that it is important to identify problems early to assist in improving outcomes for all our stakeholders. Our policies are designed to facilitate the resolution of concerns and offer protection to anyone who reports concerns in good faith under those policies.
Our remuneration programs are designed to attract, retain, and motivate employees to achieve the Bank’s strategic objectives, within our risk appetite and risk management framework. The guiding principles for the remuneration framework are:
- Strategy led reward;
- Reward balanced outcomes;
- Recognise people for their impact;
- Transparent and simple metrics; and
- Embedded risk management.
We love to hear from our customers whether it's a compliment, suggestion or an expression of dissatisfaction. It is important for us to know what we do well, and we are just as keen to hear when we have not met our customer's expectations.
We consider Internal Dispute Resolution (IDR) to be an important and necessary first step in the complaint handling process, as it gives us an opportunity to hear when we do not meet our customer’s expectations and address them genuinely, efficiently and effectively. We are also a member of an external dispute resolution (EDR) service, being the Australian Financial Complaints Authority (AFCA).
Training and Development
Our policies stipulate that staff have adequate experience and qualifications. They ensure staff are competent to provide financial services including requiring continuing training of staff to appropriate levels. We recognise the importance of maintaining and improving our skills, whether through internal training and development, or via financial assistance for external training.
Fees and Costs
The Product Disclosure Statement (PDS) for Sandhurst's investment products outlines the fees and costs that may be charged. These costs may include management fees and costs, indirect costs, performance fees, transaction costs and buy/sell spreads and do not include any advice fees agreed to be paid to financial advisers, if engaged by an investor.
Sandhurst is committed to ensuring that remediation events are: appropriately identified, investigated, root causes are understood, control/s put in place to prevent re-occurrence and customers are remediated to put them back into the position they would have been had the event not occurred. The remediation framework and procedures have been designed to uphold principles to support remediations. This includes customer focused culture where an approach is required to be designed to err in favour of the customer. This is achieved through providing adequate information to customers, allowing customers opportunity to provide further feedback, providing access to internal and external dispute resolution schemes and promoting continuous improvement to deliver the most effective customer outcomes.
Equitable Asset Valuation and Pricing
Our managed fund constitutions and policies detail the calculation methods or background considerations used in reaching decisions regarding the discretions for asset valuation and pricing. The policies provide guidance on how discretions are permitted to be exercised.
Best Execution and Trade Allocation
The Funds Management Investment Governance Framework outlines the governance of the asset management activities when Sandhurst is the Asset Manager. This includes trading activities such as best execution considering: prices, urgency, importance of execution and research. Fair allocation including price averaging is performed when trades are for multiple Funds.
Frameworks and policies outline trading protocols to ensure that investors' interests are maintained ahead of corporate interests and individual officer interests, our license and legal obligations are complied with, and our actions and activities promote the integrity of capital markets. Key controls are adopted including segregation of duties, dual signoff of trade instructions, execution processes, trading authorisation and conflicts management.
Where Sandhurst uses external Asset Managers, we consider their execution and allocation policies as part of our due diligence. See ‘Manage the Manager’ section below for details on collaboration activities.
Conflicts of Interest
The Conflicts of Interest Framework, the Conflicts of Interest Policy and related documents identify relevant duties and interests of our staff which provides a means to ascertain potential and actual conflicts. The policy provides guidance to staff and representatives for identifying and effectively managing and monitoring any actual, perceived or potential Conflicts of Interest that may arise. Conflicts are managed by a combination of internal controls, disclosure and a strong conflicts management culture where each staff member owns risk management and compliance. The Framework and Conflicts of Interest policy extend to gifts and entertainment and related party transactions. Registers of all conflicts, gifts and transactions are available to all staff, and are maintained and reported on regularly.
The effectiveness of Sandhurst’s Conflicts of Interest Framework and Policy is reviewed at least biennially. Group Internal Audit, the Group’s internal audit function and third line of defence in the ‘three lines of defence model’, conducts regular audits. A review of the appropriateness, effectiveness and adequacy of the Risk Management Framework is carried out annually, while an independent party conducts a comprehensive review at least every three years.
How we work for you
At Sandhurst we are committed to delivering high quality long-term outcomes for our customers. We embrace a responsible investment philosophy with a disciplined and conservative approach. Our key strengths lie in asset allocation – we believe this is the key to delivering long-term performance. Sandhurst operates and manages both internal and external investment functions.
The Investment Team analyses assets using several techniques including credit research, portfolio risk management and portfolio liquidity management. Views are formed on the outlook of markets which will be used in establishing asset allocations in some funds and incorporated with detailed credit analysis in other funds. Credit analysis of the counterparty or issuer are completed through analysis of financial statements, meetings and engagement with management of issuers and review of rating agency reports. More complex investments such as Residential Mortgage Backed Securities benefit from detailed analysis of the pool of assets within the securitised trust. Assets are assessed for their impact on the overall risk and reward of the fund's asset portfolio. Trades are managed in various markets to contain trading costs with the objective of adding to returns. The Investment Team maintains ongoing weekly monitoring of positions in the credit and multi asset portfolios.
Manage the Manager
Where Sandhurst invests indirectly through investment vehicles managed by a variety of expert asset managers, we call this the ‘manage the manager’ approach.
The expert asset managers that Sandhurst selects all share one common characteristic: they have expertise in their field and have a record of delivering competitive investment performance over the long term.
The Investment Team has regular meetings to discuss market sentiment, market outlook, portfolio exposures, asset allocations and monitor current liquidity. These meetings are used to test the respective portfolios current positioning and discuss proposed actions based on perceived outlook. These discussions ensure there is awareness of current market conditions, focus on risks and opportunities for the various portfolios, discuss recent performance and portfolio changes as well as upcoming news and investment opportunities.
Research and analysis is undertaken ahead of appointing asset managers. Ongoing monitoring of appointed asset managers is conducted to support investment outcomes for Sandhurst’s funds. The Investment Team provides research and analysis to the Investment Governance Committee for review and oversight.
The Investment Governance Committee is responsible for the investment frameworks and policies and monitoring of adherence and performance. Issues with performance, processes, people and systems that disadvantage beneficiaries are escalated to the Investment Governance Committee, Audit, Risk and Compliance Committee and STL Board depending on the nature and severity of the issues. Remediation and rectification management and monitoring is reported to the relevant committee.
Environmental, Social and Governance (ESG)
Our socially responsible investing considerations reflect our belief that there are links between an organisation's environmental and social impacts, the quality of its corporate governance, and its long-term business success. We aim to extend responsible investment and ESG integration activities across a broad range of asset classes. We offer a product that allows investors to choose to express ESG values in their investments. We engage with other key stakeholders through a variety of industry initiatives to improve corporate governance standards, improve transparency and disclosure, and encourage responsible investment practices through the integration of ESG issues.
Sandhurst may hold direct investment in listed shares, debt of mutual organisations and units in managed investment schemes. Sandhurst recognises the strong link between good corporate governance and investment value. We are of the view that corporate governance and the exercise of voting rights are an important aspect of any investment decision process. To assist our investors in understanding our approach to exercising voting rights, Sandhurst has developed a voting policy that sets out our guiding principles, and in the cases where the responsibility for proxy voting is retained by the asset managers that Sandhurst has appointed, it will review the managers’ proxy voting policies to be consistent with our guiding principles.
The Investment Team operates several investment processes and hence participates in a number of markets. The team participates in forums, networks and industry conferences as well as engaging with brokers, other investors, consultants, researchers and security issuers. These activities support keeping abreast of sentiment, outlook and emerging issues for the assets within our products. This process of participation further develops the existing expertise of the team. The information and skills together support the identification of potential risk and issues in advance and where not anticipated as they unfold.
Affiliations and associations are maintained with the following industry groups, organisations and associations:
- Financial Services Council (FSC)
- Chartered Financial Analyst (CFA)
- Australian Securitisation Form (ASF)
- Responsible Investment Association Australasia (RIAA)
Making it easier for investors
Sandhurst aims to provide our investors with education, general advice and investment solutions so that they build a successful financial future. We offer several different tools to help educate investors about important financial issues, products and opportunities on our website.