Foundation North's whole risk policy is three numbers

Foundation North runs NZ$1.9 billion across 33 external managers with no internal investment team. What keeps that safe is not forecasting. It is three limits written into a short policy: no more than 10% of the portfolio in any single actively managed fund, no more than 10% of any third-party fund's assets, and at least half the portfolio convertible to cash within 30 business days. Each one has a stated remedy for when it binds.

Key numbers, and what they mean

10%

The most that can sit in any single actively managed fund, or 20% for fixed income and cash. The limit is per fund rather than per firm, so a manager running several funds can hold more than 10% in total.

10% of a fund

The most it will own of any third-party pooled fund. Above that its own redemption becomes the fund's liquidity problem, and the price it sells at. Tested annually, at fund level rather than share class.

50% in 30 days

The minimum share of the portfolio convertible to cash within 30 business days. If it falls below, the policy requires a plan agreed with the asset consultant to restore it within 12 months.

12 months

Of grants and operating costs that short-term liquidity must fund, alongside currency hedges and uncalled commitments. The two obligations most likely to force a sale are named in the rule itself.

Strategic allocation, November 2025

Global equity33.5%

Global private equity17%

Alternatives13%

Fixed interest and cash11%

Property, local equity and impact9.5%

Infrastructure8%

Private and sub-investment grade credit8%

Its defensive target is 22.25% with a hard floor of 10%, measured by how assets behave rather than by asset-class label. The New Zealand impact allocation has a 2% target and a 0 to 10% range.

The read-through

From the report

Takeaway: how to apply it to a portfolio

Exposure to any single actively managed fund is limited to 10% of the portfolio, and investments must not constitute more than 10% of a third-party pooled fund's assets under management.

Concentration runs in two directions and most policies cap only one. The first limit protects you from the manager. The second protects you from being the manager's problem, because above 10% of a fund your redemption is the liquidity and it moves the price you get. The second one costs nothing to adopt.

The policy requires at least 50% of the portfolio convertible to cash within 30 business days, and if that is breached it requires a plan agreed with the asset consultant to restore it within 12 months.

Define liquidity as a testable number with a named remedy, not as a feeling. A limit with no cure clause gets suspended the first time it binds, which is exactly when you need it. Note too that the liquidity rule covers twelve months of grants and operating costs alongside currency hedges and uncalled commitments, the two obligations that quietly turn a liquid portfolio into a forced seller.

The policy contains no limit on derivatives, leverage, counterparties, single issuers or credit quality, and the investment committee may make exceptions to the limits it does have.

A short policy works only if you are honest about what it delegates. Foundation North does not police individual securities because it owns none, so capping each fund is its issuer control. If you hold direct positions that logic does not transfer. And write the exception clause down with a named decision-maker, because an undocumented exception is a breach and a documented one is governance.

The Argus lensThe second limit, never owning more than 10% of any fund, is a judgment about the fund rather than about the portfolio. Sizing a commitment against a fund's own capital base, its other investors and its redemption terms is a documents question. It is the one we answer. Benchmark your deals in the Portal →

About the source

Foundation North's statement of investment policies and objectives, version 23 of November 2025, contains the concentration and liquidity limits quoted here, the strategic asset allocation with ranges, the defensive floor and the spending rule. The fund value, manager count, governance and cost figures come from its annual report for the year ended 31 March 2026. The policy is reviewed annually by its investment committee and has been revised 23 times since 2002.

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