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2018 05 24 NULIS Investment Governance Policy

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2018 05 24 NULIS Investment Governance Policy NAB.005.607.0001 Investment Governance Policy NULIS Nominees (Australia) Limited Document Administration Information Schedule Approval Date 24 May 2018 Effective Date 25 May 2018 Next Review Date March 2021 Responsibility for GM, Advice Services Maintaining this Document Details of Document NULIS Nominees (Australia) Limited Approval Authority NAB.005.607.0002 Commercial in Confidence Investment Governance Policy Table of Contents Part A - Principles ...................................................................................... 5 1. Overview ........................................................................................ 5 2. Policy statements ............................................................................... 7 3. The Trustee’s Investment Philosophy.......................................................... 8 4. Role of the Board ............................................................................... 9 5. Service Provider responsibilities ............................................................... 9 6. Training.......................................................................................... 9 7. Policy and governance documentation ........................................................ 9 8. Other related reference documents .......................................................... 10 9. Review of the Investment Governance Framework .......................................... 10 Part B – Standards ..................................................................................... 11 1. Introduction .................................................................................... 11 2. Product and Investment Menu Overview ..................................................... 11 3. Trustee relationships .......................................................................... 12 4. Service Provider appointment and monitoring ............................................... 13 5. Hierarchy Structure for Investment Decision Making ........................................ 13 6. Investment governance decision making model.............................................. 14 7. Roles and responsibilities...................................................................... 14 8. RSE investment strategy ....................................................................... 18 9. Investment objectives for each investment option .......................................... 18 10. Investment strategy for each investment option ........................................... 19 10.1 Application of the investment strategies ........................................... 19 10.2 Investment strategy review .......................................................... 20 11. Investment selection ......................................................................... 21 11.1 Portfolio Construction approach..................................................... 21 11.2 Criteria for all investment options .................................................. 22 11.3 Additional criteria for directly and externally managed investment options..... 25 11.4 Additional criteria for cash investment options and cash holding account ....... 26 11.5 Additional criteria for externally managed investment options ................... 26 11.6 Additional criteria for single security investment options ......................... 28 12. Investment manager assessment ............................................................ 29 13. Valuation of investment options ............................................................. 29 14. Investment monitoring ....................................................................... 29 14.1 Investment Monitoring - Directly managed investment options ................... 30 14.2 Investment monitoring - Externally managed investment options ................ 33 14.3 Investment Monitoring - Single security investment options....................... 35 14.4 Stress Testing ......................................................................... 35 14.5 Actions taken in response to monitoring ............................................ 37 15. Member disclosure............................................................................ 39 16. Member specific investment matters........................................................ 40 16.1 Member investment limits ........................................................... 40 16.2 In-specie transfers on request from members ...................................... 43 16.3 Illiquid pensions ...................................................................... 45 17. Proxy Voting Policy ........................................................................... 46 18. Securities Lending Policy..................................................................... 47 Part C - Appendices ................................................................................... 48 1. Investment Governance Structure Diagram .................................................. 48 2. Complexity Framework ........................................................................ 49 3. MySuper and NAB Staff MySuper Investment Objectives and Strategy .......................... 51 1 Overview........................................................................................... 51 1.1 Establishment of MySuper .................................................................. 51 1.2 Ongoing governance ........................................................................ 51 2 Investment objective ............................................................................. 52 Page 2 of 88 NAB.005.607.0003 Commercial in Confidence Investment Governance Policy 3 Appropriate level of investment risk............................................................. 52 3.1 Risk factors consideration .................................................................. 52 3.2 Setting the level of risk ..................................................................... 52 3.3 Liquidity ..................................................................................... 53 3.3.1 Definitions .......................................................................... 53 3.3.2 Measuring and monitoring liquidity ............................................... 53 3.3.3 MySuper liquidity .................................................................. 54 4 Investment strategy implementation ............................................................ 54 4.1 Investment selection........................................................................ 54 4.2 Investment monitoring...................................................................... 54 4.3 Valuation of investments ................................................................... 55 5 Diversification and portfolio construction ....................................................... 55 5.1 Portfolio diversification..................................................................... 55 5.2 Neutral asset allocation and ranges........................................................ 57 5.3 Diversification within asset classes ........................................................ 57 5.4 Rebalancing ................................................................................. 58 6 Stress testing ...................................................................................... 58 6.1 Overview of the stress testing approach .................................................. 58 7 Review of the investment strategy .............................................................. 59 8 Investment scale .................................................................................. 60 9 Review and document history .................................................................... 60 10 References......................................................................................... 61 1 Overview........................................................................................... 62 1.1 Establishment of NAB Staff MySuper ....................................................... 62 1.2 Ongoing governance ........................................................................ 62 2 Investment objective ............................................................................. 63 3 Appropriate level of investment risk............................................................. 63 3.1 Risk factors consideration .................................................................. 63 3.2 Setting the level of risk ..................................................................... 64 3.3 Liquidity ..................................................................................... 64 3.3.1 Definitions .......................................................................... 64 3.3.2 Measuring and monitoring liquidity ............................................... 64 3.3.3 NAB Staff MySuper liquidity ....................................................... 65 4 Investment strategy implementation ............................................................ 65 4.1 Investment selection........................................................................ 65 4.2 Investment monitoring...................................................................... 65 4.3 Valuation of investments ................................................................... 66 5 Diversification and portfolio construction ....................................................... 66 5.1 Portfolio diversification....................................................................
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