Pendal Sustainable International Share Fund (APIR: BTA0568AU, ARSN 612 665 219)

Investment Manager, Strategy and Exclusionary Screens

We have decided to replace AQR Capital Management, LLC (AQR) as the investment manager of the Fund and bring management of the Fund in house, leveraging the expertise of Pendal Group’s global equities teams. The change will take place on or around 31 May 2022.

The Fund will continue to be an actively managed global equities portfolio. The portfolio will typically comprise around 90 stocks (though this will fluctuate over time), blending the Pendal Global Select and Pendal Sustainable Concentrated Global Shares strategies with a much stronger focus on fundamental stock analysis. There will also be enhanced scope for company engagement and the incorporation of ESG and sustainability considerations in the management of the Fund.

The exclusionary screens of the Fund will be enhanced consistent with broad market feedback around the screens required for a contemporary sustainable strategy, improving the Fund’s sustainability footprint by tightening the screens for fossil fuels and weapons.

The Fund will avoid investing in companies which directly:

• extract or explore for fossil fuels (specifically, coal, oil and natural gas); or
• produce tobacco (including e-cigarettes and inhalers); or
• manufacture controversial weapons (such as cluster munitions, landmines, biological or chemical weapons, nuclear weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments).

The Fund will also avoid investing in companies which derive 10% or more of their total revenue directly from:

• fossil fuel-based power generation, or fossil fuel distribution or refinement (coal, oil and natural gas)*;
• the production of alcoholic beverages;
• manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering;
• manufacture of non-controversial weapons or armaments;
• manufacture or distribution of pornography; and
• uranium mining for the purpose of nuclear power generation.

* Companies with a climate transition plan may be exempted from this exclusion, provided that they have in place a Paris Agreement aligned transition plan and produce climate-related financial disclosures annually, which in both cases we consider credible. We define fossil fuels as coal, oil and natural gas.

Why are we making the change?

We have decided to implement these changes because we believe it is in the best interests of investors to bring the management of the Fund’s international strategy in-house, following a review of the Fund’s existing external investment manager, AQR. We expect the changes will deliver improved investment and sustainability outcomes for the Fund, providing investors with better risk-adjusted returns over the medium to long term.

What will stay the same?

The Fund’s investment objective, benchmark, management fee and buy-sell spread will remain unchanged.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Fund.

An updated Information Memorandum (IM) reflecting the change in investment manager, investment strategy and exclusionary screens is available on request. If you would like a hard copy of the IM, please contact us.

If you have any questions about your investment or would like further information regarding the changes, please contact our Investor Services Team on 1300 346 821 (for Australian investors) or +612 9220 2499 (for overseas investors) from Monday to Friday, 8.30am to 5:30pm (Sydney time). For any questions regarding how this change may impact your own financial situation we recommend that you speak to your financial advisor and/or tax accountant.

Pendal Active High Growth Fund (APIR: BTA0488AU, ARSN: 610 997 674)
Pendal Active Growth Fund (APIR: BTA0125AU, ARSN: 087 593 682)
Pendal Active Balanced Fund (APIR: RFA0815AU, ARSN: 088 251 496)
Pendal Active Moderate Fund (APIR: BTA0487AU, ARSN: 610 997 709)
Pendal Active Conservative Fund (APIR: BTA0805AU, ARSN: 087 593 100)
Pendal Balanced Returns Fund (APIR: BTA0806AU, ARSN: 087 593 011)

Investment Manager

We have decided to replace AQR Capital Management, LLC (AQR) as the investment manager of the international shares portion of the Funds and bring management in house, leveraging the expertise of Pendal Group’s global equities teams. The change will take place on or around 31 May 2022.

Why are we making the change?

We have decided to implement this change because we believe it is in the best interests of investors to bring the management of the Funds’ international strategy in-house, following a review of the Funds’ external investment manager, AQR. We expect the change will deliver improved investment outcomes for the Funds, providing investors with better risk-adjusted returns over the medium to long term.

What will stay the same?

The Funds’ investment objective, benchmark, management fee and buy-sell spread will remain unchanged.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Funds.

An updated Product Disclosure Statement (PDS) for each Fund reflecting the change in investment manager is available on www.pendalgroup.com. If you would like a hard copy of the PDS, please contact us.

If you have any questions about your investment or would like further information regarding the changes, please contact our Investor Services Team on 1300 346 821 (for Australian investors) or +612 9220 2499 (for overseas investors) from Monday to Friday, 8.30am to 5:30pm (Sydney time). For any questions regarding how this change may impact your own financial situation we recommend that you speak to your financial advisor and/or tax accountant.

Pendal Sustainable Balanced Fund – Class R (APIR: BTA0122AU, ARSN: 637 429 237)
Pendal Sustainable Balanced Fund – Class G (APIR: PDL4756AU, ARSN: 637 429 237)
Pendal Sustainable Balanced Fund – Class Z (APIR: PDL0478AU, ARSN: 637 429 237)
Pendal Sustainable Conservative Fund (APIR: RFA0811AU, ARSN: 090 651 924)

Investment Manager and Exclusionary Screens

We have decided to replace AQR Capital Management, LLC (AQR) as the investment manager of the international shares portion of the Funds and bring management in house, leveraging the expertise of Pendal Group’s global equities teams. The change will take place on or around 31 May 2022.

Also, the exclusionary screens of the Funds will be enhanced consistent with broad market feedback around the screens for a contemporary sustainable strategy, improving the portfolios’ sustainability footprint. Investment in certain companies and industries which are materially involved in activities we consider contrary to the ethical and ESG goals of the Funds will be excluded, including industries such as:

• Fossil fuels
• Uranium
• Logging
• Gambling
• Pornography
• Weapons
• Alcohol
• Tobacco
• Animal testing
• Predatory lending

These exclusions may be applied differently across the asset classes of the Funds.

Why are we making the change?

We have decided to implement these changes because we believe it is in the best interests of investors to bring the management of the international strategy in-house, following a review of the existing external investment manager, AQR. We expect the changes will deliver improved investment and sustainability outcomes for the Funds, providing investors with better risk-adjusted returns over the medium to long term.

What will stay the same?

The Funds’ investment objective, benchmark, management fee and buy-sell spread will remain unchanged.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Funds.

An updated Product Disclosure Statement (PDS) for each Fund reflecting the change in investment manager and exclusionary screens is available on www.pendalgroup.com. If you would like a hard copy of the PDS, please contact us.

If you have any questions about your investment or would like further information regarding the changes, please contact  our Investor Services Team on 1300 346 821 (for Australian investors) or +612 9220 2499 (for overseas investors) from Monday to Friday, 8.30am to 5:30pm (Sydney time). For any questions regarding how this change may impact your own financial situation we recommend that you speak to your financial advisor and/or tax accountant.

Pendal Sustainable Balanced Fund – Class R (APIR: BTA0122AU, ARSN: 637 429 237)

On 3 February 2022, the existing units of the Pendal Sustainable Balanced Fund (Fund) were reclassified as ‘Pendal Sustainable Balanced Fund – Class R’. The name of the Fund did not change and there were no changes to the terms of the class or your rights as an investor.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Fund.
An updated Product Disclosure Statement (PDS) was issued on 3 February 2022 and made available on www.pendalgroup.com.

Pendal Fixed Interest Fund (APIR: RFA0813AU ARSN: 159 605 811)

Reduction in management costs from March 1, 2022.

With effect from March 1, 2022, management costs for Pendal Fixed Interest Fund will reduce from an issuer fee of 0.50% pa to 0.45% pa.

Pendal Geared Imputation Fund (APIR: RFA0130AU, ARSN: 102 970 089)

Pendal Imputation Fund (APIR: RFA0103AU, ARSN: 089 614 693)

Pendal MidCap Fund (APIR: BTA0313AU, ARSN: 130 466 581)

AFTER 35 years in the industry and 24 years with Pendal, Andrew Waddington will retire at the end of March 2022.

Andrew leaves with the gratitude and best wishes of Pendal and recognition of the contributions he has made to the success of Pendal’s Australian equity franchise.

Andrew will hand management of the Pendal Midcap Fund to Brenton Saunders from April 1, 2022.

Brenton has been with Pendal for nine years as a research analyst in the resource sector and portfolio manager of the BT Natural Resources Fund.

He has a total of 28 years of experience including 25 as an analyst and 16 as a portfolio manager.

Brenton will commence as Co-PM of the Fund with Andrew Waddington from January 7.

There will be a period of transition as Brenton takes greater ownership, before he becomes the sole portfolio manager after Andrew’s retirement at the end of March.

Brenton’s depth of experience, long tenure with the team, extremely strong performance record as portfolio manager and his close collaboration with other Pendal portfolio managers leaves him placed well to continue the Pendal Midcap Fund’s success.

The Pendal Imputation Fund and Tax Effective Funds, which Andrew co-managed, will be solely managed by Jim Taylor from January 7, 2022. He will be supported by Oliver Renton.

There have been no updates to the Funds’ Product Disclosure Statements (PDSs) or Target Market Determinations (TMDs) which can be found at pendalgroup.com.

Pendal Active Balanced Fund (APIR: RFA0815AU, ARSN: 088 251 496)
Pendal Active Conservative Fund (APIR: BTA0805AU, ARSN: 087 593 100)
Pendal Active Growth Fund (APIR: BTA0125AU, ARSN: 087 593 682)
Pendal Active High Growth Fund (APIR: BTA0488AU, ARSN: 610 997 674)
Pendal Active Moderate Fund (APIR: BTA0487AU, ARSN: 610 997 709)
Pendal Balanced Returns Fund (APIR: BTA0806AU, ARSN: 087 593 011)
Pendal Sustainable Balanced Fund (APIR: BTA0122AU, ARSN: 637 429 237)
Pendal Sustainable Conservative Fund (APIR: RFA0811AU, ARSN: 090 651 924)

Neutral positions review outcomes and updated benchmarks

Following a review of the neutral positions of Pendal’s diversified funds (Funds), we believe the current portfolios are risk/return efficient and no change to the neutral positions is required.

The neutral positions reflect our latest asset class assumptions for return, risk and inter-asset class correlations and position the funds to take advantage of future market conditions. We are updating some benchmarks effective 1 February 2022 for the following reasons:

Alternative investments benchmark: we believe that in an environment of almost zero cash rates, the Bloomberg AusBond Bank Bill Index is not consistent with the risk/return profile of alternative assets and that the most appropriate benchmark is specified in the Your Future Your Super (YFYS) regulations and as stated in the tables below. It captures the desired risk and return characteristics of alternatives – i.e. assets which sit in between equities and bonds on the risk return spectrum.

International shares benchmark: we believe that moving from the current blended benchmark to a single consistent benchmark (with hedged and unhedged versions) best captures the investible universe for the Funds. The proposed index is the MSCI All Countries World ex Australia (Standard) Index (Net Dividends) in AUD, which includes both developed and emerging markets, weighted according to their relative market capitalisation.

With the move to a single international shares benchmark, which for the sustainable funds now includes emerging markets, we are also changing the neutral hedge ratio for international shares to be adjusted within the Sustainable Balanced and Sustainable Conservative funds to maintain a consistent level of developed market foreign exchange exposure to that which was held previously. No change is required to the hedge ratio for the other diversified funds as these funds already held emerging market equities. 

Australian Property Securities benchmark: we believe that the S&P/ASX 300 AREIT (TR) Index although only slightly broader than the S&P/ASX 200 AREIT (TR) Index, provides greater potential for diversification (as the number of stocks is 50% greater in the S&P/ASX300) and better represents the investment opportunity set available.

Australian shares benchmark: For the sustainable funds, with the same view Australian Property benchmark changes above, we believe that the S&P/ASX 300 (TR) Index although only slightly broader than the S&P/ASX 200 (TR) Index, provides greater potential for diversification and better represents the investment opportunity set available.

The details of changes are summarised in the tables below.

Table 1: Benchmark updates for the following funds:

• Pendal Active Conservative Fund
• Pendal Active Moderate Fund
• Pendal Balanced Returns Fund
• Pendal Active Balanced Fund
• Pendal Active Growth Fund
• Pendal Active High Growth Fund

Table 2: Benchmark updates for the following sustainable funds:

• Pendal Sustainable Conservative Fund
• Pendal Sustainable Balanced Fund

Details of these changes can be found here. There have been no updates to the Funds’ Product Disclosure Statements (PDS) or Target Market Determinations (TMDs).

Pendal Sustainable Australian Fixed Interest Fund – Class R (APIR: BTA0507AU, ARSN: 612 664 730)

On 25 November 2021, the existing units of the Pendal Sustainable Australian Fixed Interest Fund (Fund) were reclassified as ‘Pendal Sustainable Australian Fixed Interest Fund – Class R’. The name of the Fund did not change and there were no changes to the terms of the class or your rights as an investor.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Fund.

An updated Product Disclosure Statement (PDS) was issued on 25 November 2021 and made available on www.pendalgroup.com.

Regnan Global Equity Impact Solutions Fund – Class R (APIR: PDL4608AU, ARSN: 645 981 853)

On 9 August 2021, the designation of this class of units was changed from ‘Class A’ to ‘Class R’. The name of the Fund did not change and there were no changes to the terms of the class or your rights as an investor in the class.

What do you need to do?

No action is required. You will be able to continue to invest or withdraw from the Fund.

An updated Product Disclosure Statement (PDS) was issued on 9 August 2021 and made available on www.pendalgroup.com.

BT Wholesale Monthly Income Plus Fund (APIR code BTA0318AU, ARSN 137 707 996)

Notice of changes to the asset classes and asset allocation ranges of the BT Wholesale Monthly Income Plus Fund (Fund)

From 14 July 2015, we are removing the alternative investments asset class and asset allocation ranges and changing the fixed interest asset allocation ranges as shown in the table below.

Why are the asset classes and asset allocation ranges changing?

The Fund has not invested in alternative investments since March 2011 and we no longer intend to invest in this asset class. The changes to the asset classes and asset allocation ranges will more accurately reflect how we intend to invest the Fund in the future.

More information?

If you have any questions, please contact the BT Customer Relations on 1800 813 886 between 8.00am and 5.30pm (Sydney time), Monday to Friday.