Principal Global Investors (Australia) Limited Stewardship

Principal Global Investors (Australia) Limited (“PGIA”) is a member of the Financial Services Council and fully supports the adoption of FSC Standard 23: Principles of Internal Governance and Asset Stewardship, dated July 2017 (“Standard”).  As a fiduciary asset manager, we seek investments with good governance objectives. We set out below how the three key principles of the standard have been applied and our approach to integrating those responsibilities into the investment process, indicating areas in which we may choose to deviate and why such deviation may be viewed as meeting the best interest of our clients.

Organisation and approach

We are part of Principal Global Investors, the global asset management division of Principal Financial Group®. 

PGIA is an investment manager to wholesale clients and we act as the Investment Manager for managed investment schemes (“Schemes”). We have delegated the investment management of the Schemes to our specialized investment teams, Principal Fixed Income, Principal Real Estate, and Principal Finisterre through our related parties, Principal Global Investors LLC (“PGI”), Principal Real Estate Investors LLC and Principal Global Investors (Europe) Limited respectively.

We strive to add significant value through our client service program and to help solve our clients’ problems by thoroughly understanding their general business practices, investment strategies and overall plan structure.  A team of client service, marketing and investment management professionals are assigned to each client, with the relationship manager responsible for the overall quality of service.

We believe the key to superior client service is clear communication. Our client service model is flexible and tailored to each client’s specific needs and objectives. We first establish service requirements at the outset of the client relationship when we develop the client service profile and client advisory plan. These address client expectations and client specific needs including account set up, reporting requirements, client review meetings, web site access, training programs, and any additional resources we can provide to meet our client’s investment needs.

Our mission is to provide our clients with investment solutions that deliver successful outcomes, not simply returns. This happens by taking the time to get to know each client and their complex investment needs. From there, we use that knowledge and our own expertise to select the right mix of solutions from our specialised investment capabilities to seek to achieve a client’s investment objectives.

Our clarity of purpose, commitment to fiduciary responsibility and disciplined investment strategies pervades our culture and client focus. Through our commitment to clients, dedication to prudent management and fiduciary responsibility, and commitment to our investment philosophy, we have earned the position of trusted partner and advisor. We pride ourselves on the high ethical standards upheld throughout our organization with a commitment to integrity, client focus, teamwork, and the pursuit of excellence at the core of everything we do.

  • We instill in our employees a strong sense of responsibility to clients. We require strict style discipline, risk management and diversification in our portfolios, and we strive to provide exceptional client service. 
  • Care is taken to ensure incentives are aligned with client objectives.
  • Across all asset classes, we strive to maintain a collaborative team-based culture. 
  • We have investment and marketing specialists in global offices across multiple asset classes with the belief that collaboration and information sharing is imperative to our success.
  • Our organization embraces diversity among our staff. Our professional staff is made up of a combination of both experienced professionals promoted from within the company and those hired from other firms for their specialized experience.
  • We are diverse in our academic backgrounds as well—some staff members have experience solely in the asset management industry and others are hired for their extensive knowledge in a single industry and focus on company research within that industry.
  • Regardless of role, all employees are expected to understand, believe and support our philosophy.

For additional information regarding Principal Asset Management and Principal Real Estate, including the management and key personnel, please refer to the Form ADV filings at https://adviserinfo.sec.gov/firm/summary/109002 (for PGI) and https://adviserinfo.sec.gov/firm/summary/109008 (for Principal Real Estate).

Internal governance

Ensuring the Principal Financial Group® is governed well through effective, independent oversight of management and company operations has been an important part of our heritage and our success. Each generation of management is committed to doing what is good for our customers and shareholders and operating with integrity. The Global Code of Conduct services as the foundation for ethical behavior across the firm.  

Business strategy for the asset management division of the firm is determined by the operating committee of Principal Global Investors who is responsible for review, approval, and implementation of key strategies, policies, and the overall direction for Principal Global Investors. 

The operating committee is involved with and responsible for providing world class and risk controlled investment performance, creating a high performing culture, and achieving business results by effective management of human capital, ensuring that financial targets are met with appropriate controls, and achieving measurable goals on diversity and respect for all employees.

The committee serves as a forum for management to discuss and consider new product initiatives, strategic direction, and global market conditions with all topics discussed openly and candidly. If a resolution to a specific topic is required, the group discusses the issue, identifies possible solutions, agrees on a specific resolution to the issue, and determines the appropriate method of communication.

As a registered advisers, PGI and Principal Real Estate Investors both have a duty of loyalty and to always act in utmost good faith, place our clients’ interests first and foremost and to make full and fair disclosure of all material facts and, information as to any potential and/or actual conflicts of interests. Our Code of Ethics addresses conflict of interests and requires supervisor and compliance pre-approval if any activity or relationship may present, or be perceived as, a potential conflict of interest.

PGI, Principal Real Estate Investors and its employees are also subject to various requirements under the Investment Advisers Act of 1940 (the “Advisers Act”) and rules adopted under the Advisers Act and our Code of Ethics. These requirements include various anti-fraud provisions, which makes it unlawful for advisers to engage in any activities which may be fraudulent, deceptive or manipulative.

These antifraud provisions include the SEC Compliance Programs of Investment Companies and Investment Advisers (Compliance Programs Rule) (SEC Rule 206 (4)-7) which requires advisers to adopt a formal compliance program designed to prevent, detect and correct any actual or potential violations by the adviser or its supervised persons of the Advisers Act, and other federal securities laws and rules adopted under the Advisers Act.

For additional information regarding Principal Asset Management and Principal Real Estate, including the management and key personnel, please refer to the Form ADV filings at https://adviserinfo.sec.gov/firm/summary/109002 (for PGI) and https://adviserinfo.sec.gov/firm/summary/109008 (for Principal Real Estate).

PGIA is subject to many of the policies and procedures of PGI but also maintains separate error reporting, training and development requirements, complaints procedures and arrangements for outsourced providers. PGIA maintains oversight of the sub-advisers through our arrangements for outsourced providers which includes regular reporting and meetings together with error reporting obligations.

Asset stewardship

We are a fiduciary, and will always act in the best interests of our clients; subject to this overriding obligation, we have the highest regard for good corporate governance and model our business accordingly.

In implementing our investment process, we seek always to protect and enhance shareholder value.  On-going monitoring of investee companies is a key element of this process, and this is facilitated by our developing ongoing communication with the management of companies we invest in on behalf of our clients.

We seek to invest in companies that are well managed and/or are improving their corporate governance. Our belief is that sound corporate governance will create a framework within which a company can be managed in the best interests of its shareholders. We seek to always protect and enhance shareholder value, whilst also seeking not to expose our clients to any unnecessary risks.

Our commitment to Social Responsible Investing and Environmental, Social, Governance issues revolves around one key factor—our fiduciary responsibility to our clients, to act in their long-term best interests. Our approach to Responsible Investing is always driven by that priority. Because we’re a research-driven organization, we’re able to deliver on this commitment by developing strong, stable, research-based investment solutions through our globally integrated asset class teams and shared information infrastructure.

Please refer to https://www.principalam.com/us/investment-strategies/real-estate/responsible-property-investing for policies and statements outlining PGI and Principal Real Estate Investors’s approach to stewardship including but not limited to policies related to proxy voting, corporate responsibility, responsible investing and engagement and transparency.