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 highly experienced provider of investment solutions and trustee services that create, enhance and protect wealth.
Sandhurst is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited (the Bank) and part of the Bendigo and Adelaide Bank Group of companies (the Group). Sandhurst is part of the Bank's Wealth division and is a highly regarded financial services provider.
The Bank aims to be Australia's most customer connected bank. The philosophy of the Bank is to assist communities to develop and be successful, and this is reflected in the Bank's purpose of:
'As a bank we are good with money. But we're more interested in the good that money can do'.
Like the Bank, Sandhurst acknowledges that the success of the business will grow in line with the increasing prosperity of the people and communities we serve.
Sandhurst was formed in 1888 and in 2018 celebrated a milestone of 130 years in business. Sandhurst has become a modern, full-service wealth manager renowned for its customer service excellence and integrity. As our company has grown and evolved, we have never lost sight of our commitment to caring for our customers through every life stage. Much has changed over the years, but our pledge to delivering specialised advice and exceptional service has not.
Sandhurst currently have approx. $6.9 billion in funds under management with over 97,000 customers as at 30 June 2021. The Investment Team has over 60 years of investment experience and our Sandhurst Trustees 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:
- Managed funds
- Commercial loans
- Access to funeral bonds
- Corporate trustee and custodial services
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. Sandhurst is also a Registrable Superannuation Entity Licensee regulated by APRA and undertakes internal investment management activities in relation to the superannuation funds. Customers and beneficiaries are herein referred to as beneficiaries.
Our investment team leaders, Board and Governance Committees
The Sandhurst Investment Team (Investment Team) has many decades of experience in the areas of financial services including funds management, treasury and risk management. The Investment Team work closely with other Departments within Sandhurst and the Bank that also provide financial services such as lending. The Investment Team has the daily responsibility for portfolio management and market risk decision making and works within the Sandhurst governance structure which is responsible for overall investment policy.
The Sandhurst 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 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 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 Board on investment matters.
Our embedded processes
Sandhurst has an established governance framework and policies which are designed to ensure Sandhurst 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 beneficiaries, and that when making decisions the impact on beneficiaries 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, as part of the Bendigo and Adelaide Bank Group, 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 identify problems early to assist in improving outcomes for all our stakeholders.
The frameworks and policies include and are not limited to:
Code of Conduct
The code outlines our corporate values of teamwork, integrity, performance, engagement, leadership and passion. The objective of the Code is to ensure that high standards of corporate and individual behaviour are observed by staff and provides a framework for all staff to use to guide their decisions and actions.
The recognition and management of risk is critical to our success. Sandhurst's regularly reviewed risk management framework is the totality of systems, structures, policies, processes and people within its business operations that 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 beneficiaries.
Sandhurst's approach to risk management is inclusive of several risk areas, including credit, market, liquidity and operational risk, and 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 Sandhurst Board is ultimately responsible for ensuring a sound risk management culture and the risk management framework is always in place to appropriately manage material risks to Sandhurst's business operations. It is recognised that at all levels of Sandhurst's staff must take an active role in maintaining an effective risk management culture.
Policies set out obligations that are imposed on all employees and directors regarding securities beyond those imposed by law with a focus on putting member interests ahead of personal interest, these include forbidding insider trading and front running.
Speak Up and Whistleblowing
Sandhurst are committed to promoting a culture of compliance and ethical behaviour, where staff decisions, actions and behaviours reflect and reinforce our corporate values and purpose. 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 policies provide a framework that is based on five guiding principles that are directly aligned to the objectives of the organisation within its risk appetite and risk management framework. They are
- Transparency and procedural fairness;
- Alignment with values;
- Appropriate risk behaviour; and
- Supports good customer outcomes.
Remuneration policies reinforce and align with our corporate values and are designed to take a balanced approach between sales, performance, values, behaviours and 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, and our learnings from this process can be used to improve methodologies and grow our business. 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.
Brokerage and Commissions
The Product Disclosure Statement (PDS) for Sandhurst's investment products outlines the fees and costs that may be charged. These costs may include clearing costs, brokerage, stamp duty and buy/sell spreads. Sandhurst and its related bodies corporate do not act as a broker and so these charges are paid to external parties only.
Sandhurst takes a cautious approach to risk. The key documents that establish our policies set out the principles to follow in the event there has been an error or risk event, and how the risk event or error is identified, analysed, evaluated and treated. Our policies outline escalation and reporting requirements and the circumstances where compensation will be paid to disadvantaged investors.
Equitable Asset Valuation and Pricing
Our policies detail the background considerations used in reaching decisions regarding the discretions for asset valuation and pricing. They provide guidance on how discretions are permitted to be exercised.
Best Execution and Trade Allocation
Frameworks and policies outline trading protocols to ensure that beneficiaries' 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.
Conflicts of Interest
Framework and policies identify relevant duties and interests of our staff which provides a means to ascertain potential and actual conflicts. This prevents staff placing themselves in a position where their duty to beneficiaries conflicts with their personal interest of duty to someone else. Conflicts are managed through disclosure and a strong conflicts management culture where each staff member owns risk management and compliance. The frameworks and policy for conflicts of interest 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 frameworks and policies is considered at least biennially. Group Assurance, the Group's internal audit function and third line of defence in the 'three lines of defence model', conduct regular audits. Independent comprehensive reviews of the risk management framework are conducted 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 RMBS 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 Sandhurst 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 longterm business success. We are committed to extending responsible investment and ESG integration activities across a broad range of asset classes. We offer products that allow investors to choose to express ESG values in their investments. We actively collaborate 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 Sandhurst 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)
- The Association of Superannuation Funds of Australia (ASFA)
- Chartered Financial Analyst (CFA)
- Australian Securitisation Form (ASF)
- Responsible Investment Association Australasia (RIAA)
Making it easier for investors
Sandhurst aims to provide our customers with education, advice and investment solutions so that they build a successful financial future. We offer several different tools to help educate customers about important financial issues, products and opportunities on our website.