Salt director Matt Goodson says the fund’s benchmark is cash plus 5% and that it has “a forever high water mark,” meaning any failure to meet that return has to be made up before any performance fees can resume.
“It requires genuine out-performance to get paid,” Goodson says.
Salt’s website shows the fund’s annual returns at May 31 were 10.63% since inception in July 2014.
The fund’s size at March 31 was $113 million and the return for that year was 21.3%, up from 13.1% the previous year.
In total, fees from the company’s retail funds rose to $9.1 million in the latest year from $6.3 million the previous year.
The second-biggest earner is the Salt NZ Dividend Appreciation Fund with fees of $1.1 million, down 3.7% from the previous year.
The fund’s size at March 31 was $99.8 million and it earned 7.38% in the year ended March. The dividend funds’ annual returns at May 31 were 10.47% since inception in July 2015.
Goodson says that reflects fluctuations in the size of that fund, which doesn’t pay performance fees.
“The fund itself has performed extremely well relative to the index and relative to its peers.”
Salt has about $1.92 billion in funds under management with more than half that being wholesale money.
The third biggest earner is the Salt Carbon Fund which paid fees of $833,480 in the latest year, down 5.5% from the previous year.
Units in the fund, which is listed on NZX, are currently trading at $1.45, a discount to net asset backing of $1.707, putting its market capitalisation at $41.2 million.
Goodson says the unit price has risen steadily off its lows – it traded as low as $1.38 in May.
“The issue for the carbon market is that the wholesale carbon price has been somewhat weak in the last couple of years,” he says.
That reflects the uncertainly created by the previous Labour government policy on whether to include forestry in the emissions trading scheme.
Goodson says there’s a diminishing stockpile of carbon credits with demand exceeding new supply.
“It’s our expectation that the carbon price will rise and that the discount will disappear.
The Carbon Fund’s annual returns since inception have been 8.11%.
Salt Investment Funds, which includes the retail funds only, saw its net profit for the year drop to $34,819 from $156,865 the previous year, but Goodson says that’s no indication of Salt’s overall profitability.
