NZ Nature Fund was established to support the conservation efforts on a number of NZ islands. We speak to trustee Jonathan Eriksen about the fund’s investment approach and efforts to eradicate pests
Jonathan Eriksen, Managing Director of EriksensGlobal, is a household name in the Australasian investment community. With over 40 years of experience in actuarial, investment and superannuation consulting, he has worked with a diverse range of clients, not only in New Zealand and Australia, but also across many Pacific Nations.
But if running a consultancy business wasn’t busy enough, Eriksen also devotes part of his time to help conservation efforts in New Zealand through his role as Trustee of the New Zealand Nature Fund (NZ Nature Fund).
The NZ Nature Fund was established by Denis Marshall, who was the founding Chairman of New Zealand National Parks & Conservation Foundation, and today the fund supports the efforts of the Department of Conservation to eradicate pests from the many islands surrounding the country, although it also supports the Auckland Council and others such as the Southern Lakes Sanctuary Trust.
When Eriksen came on board, he was asked to take a look at the fund’s investments, as the majority of it was held in cash and term deposits.
“We’re putting in place a governance and investment management framework, based on our expertise. But the way we do it in New Zealand is to take advantage of something called portfolio investment entities, or PIEs, which are tax and fee-efficient,” Eriksen says.
“The New Zealand Nature Funds is a charity, so there is a zero-tax rate, but any additional tax and expenses come out of the PIE. And so the accounting records are easy, because you just get a statement once a month and a PIE tax statement once a year, and you’ve got all the numbers at your fingertips,” he says.
As a charity that needs to pay out sums of money to various projects, the portfolio needs to be liquid and low risk. After all, the primary goal is not to build wealth through investment returns, but simply ensure the money is available, while generating a modest income rate.
We're building up a portfolio of low-risk assets to basically manage the donations that come in and then pay them out to the various projects that we've got as and when the recipients of those donations need them – Jonathan Eriksen, Managing Director of EriksensGlobal
“We’re building up a portfolio of low-risk assets to basically manage the donations that come in and then pay them out to the various projects that we’ve got as and when the recipients of those donations need them,” he says.
“The Department of Conservation has got several big projects going that we’re working with them on, and but also, we’re trying to eradicate the Wallabies from Kawau Island, and that’s an Auckland Council one.
“We are managing this as if it is the same portfolio, as one pool of assets. We’re using a range of multi-asset, income funds, which have a small proportion of growth assets and equities in them, and a little bit of property, but not much,” he says. “We still have cash and term deposits in the mix, too.”
“The bonds and cash are both global and domestic bonds that give you a good spread, and they’re actively managed, so when the equity markets look toppy, then the manager reduces the exposure to equities.
“Since we’ve been involved, we’ve got them up to NZ$4 million. But of course, we’ve been paying out the donations every year as well,” Eriksen says.
Eradicating Pests and The Restoration of Auckland Island
The NZ Nature Fund has backed several projects, including the successful eradication of pests from Disappointment Island. Despite the name, the project has been a huge success.
A much larger challenge is the eradication of pests from the Auckland Island, or Maukahuka, a subantarctic island, about 465 kilometers south of Aotearoa New Zealand. It is home to more than 500 species of native plants and animals, over 100 of which are not found anywhere else in the world.
But its flora and fauna have been deeply impacted by feral animals such as pigs, cats and mice.
“There are many species, mainly birds, not only on the land, but also in the seas around the island. One of these frustrating things is that there’s probably some species of cool lizard that we don’t even know is there yet,” he says.
The pigs are the main problem as they wreck the indigenous vegetation and this causes devastating erosion.
“You get a lot of runoff. If there’s a lot of rain, then the soil washes into the sea, and then you get the sediment going through, which clogs up the bivalve shells. It degrades the island and reduces the land mass. And, you risk losing some rare plant species, but also the nesting habitat of the indigenous seabirds,” he says.
There are many species, mainly birds, not only on the land, but also in the seas around the island. One of these frustrating things is that there's probably some species of cool lizard that we don't even know is there yet
Initially, an $80 million project was set up to restore the island, but overzealous cost-cutting resulted in the scrapping of the program from the budget. NZ Nature Fund is now trying to help raise this amount to get the project underway.
“I’m conservatively saying that I’m trying to raise NZ$25 million in the next 12 months. But if I can do that, then that will cover the first two or three years’ work and give the project sufficient momentum and raise its profile to make obtaining the remainder of the funds somewhat easier,” Eriksen says.
It is a substantial project. The project will take at least eight years to restore 46,000 hectares of land. Not only do tracks need to be cut to access the various parts of the islands, but they also need to build helicopter pads to bring in supplies and evacuate staff when necessary. And of course, when the project is completed, all this infrastructure needs to be removed again.
“We’re going to need helicopters to basically evacuate workers if something goes wrong from the Auckland islands. But maybe with the New Zealand Defence Forces, we can use some of the new helicopter training to actually take some gear down there. But there’s a lot of fine-tuning involved to manage the project once it gets started” he says.
For more information on NZ Nature Fund’s project to restore Auckland Island/Maukahuka, please see here.
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