PAINTING OUR FUTURE
Quayside’s SIPO Review
The SIPO is a foundational document that sets out how an investment organisation is to behave over time — its principles, constraints, and strategic direction.
Quayside maintains a biennial review process to ensure ongoing alignment with its goals. However, given the potential of a significant transaction in the future, it was important to conduct a thorough review to confirm that the SIPO remains fit for purpose. While the previous strategy was appropriate, the review offered valuable new insights and learnings, helping the team refine and strengthen their approach moving forward.
Importantly, the review was able to independently confirm that the capital market assumptions and the strategic asset allocation used by Quayside to deliver our forecast returns to Council were appropriate and aligned with Council objectives.
A Portfolio with Purpose
The updated SIPO introduces a clearer view of how each asset class contributes to the overall portfolio. Quayside’s Tania Cutfield, who managed the review, uses a construction analogy to explain the thinking. “Private equity adds another dimension, just like building a house, you must have clear plans and details for each asset class when you are building a portfolio, just like you would the specific building material you are using to build a house. The amended SIPO is very detailed on the roles and function of each asset class and the role they need to play in the portfolio.”
This framing helps clarify the role of each investment type. The SIPO doesn’t prescribe exact moves—it sets the boundaries and principles. The asset class strategy fills in the detail.
Several updates were made in response to the Council’s Statement of Expectation and to bring the SIPO in line with current practice and future needs:
- Return Objective:
Shifted from a flat 7% to inflation + 5% - Strategic Asset Allocation:
Aligned to reflect Quayside’s and Council’s long-term goals. - Benchmarks and Return Expectations:
Reviewed across asset classes for consistency and relevance. - Prudential Limits and Liquidity Requirements:
Updated to provide enhanced structure and discipline. - Flexibility for New Asset Classes:
Ensuring the Investment Portfolio can evolve as opportunities arise in a disciplined manner.
Seeking Intergenerational
Harmony
One of the central challenges of the SIPO review was balancing short-term needs with long-term responsibility. Unlike other investment vehicles, we don’t receive regular inflows of new capital, so every decision about distributions versus retaining earnings directly impacts our ability to meet this intergenerational mandate.
“As a perpetual fund, Quayside doesn’t have a fixed end date so there’s an inherent tension that needs to be finely balanced,” Tania says. “If you have too much liquidity and under distribute, you’re not doing enough for our community today. But if you dial back risk to protect the dividend and take a shorter-term view, you are potentially limiting future growth. The SIPO had to find a middle ground.”
This tension reflects a broader theme of intergenerational stewardship. The portfolio isn’t just a financial tool — it’s part of a long-term relationship with the region, akin to whakapapa, the story is enduring and evolving.
Guardrails, not Handcuffs
The refreshed SIPO provides structure and is designed to accommodate what’s already in the portfolio, while delivering enough guidance/structure to avoid drift.
“It’s a combination of art and science,” Tania notes. “We sense-checked it with external consultants, to make sure we were aligned with best practice. But we also needed to stay true to our own purpose.”
With 80% of the portfolio in a single asset, conventional advice would suggest offshore diversification. But Quayside’s reality is different.
The SIPO reflects that, balancing efficiency, resilience, diversification and strategic intent. This foundational document affirms Quayside’s commitment to thoughtful, purposeful investing. It recognises the weight of intergenerational stewardship and provides a flexible framework for navigating an ever-changing landscape.
As Tania reflects, “The SIPO is the outline of a picture, the strategy is the colour and the portfolio is the painting we create together — one that honours our past, serves our present, and inspires our future.”
