$5b in Kiwi funds under custody outsourcing review


Kiwi Wealth, a NZ fund manager with one of the largest Kiwi Saver funds, is looking to outsource its securities servicing capability with the help of specialist Sydney-based consultant Drew Vaughan, the principal owner of Dymond, Foulds and Vaughan.

Total assets in the mix are about NZ$5 billion (A$4.6 billion), with the Kiwi Saver scheme accounting for NZ$3.6 billion. The securities servicing firms are also mixed, with J.B. Were, which is not a specialist, covering the biggest component. There are also some products which have in-house custody.

According to NZ sources, the results of the review should be revealed within the next few weeks, although they are likely to be implemented in stages which last as long as 12-18 months.

For Vaughan, the review follows a busy year across the Tasman last year when he conducted securities servicing reviews for NZ’s two largest fiduciary investors – the Accident Compensation Commission, which consolidated its services providers under J.P. Morgan, and NZ Super, which retained Northern Trust.

Coincidentally, both ACC and NZ Super are shareholders in Kiwi Wealth, which has several different product lines. As a retail manager and Kiwi Saver operator, the review and transition, if it goes ahead, will be quite complex.

– Greg Bright, with David Chaplin of Investment News NZ