A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
Milford and NZ Super confirm split, still friends
(pictured: Anthony Quirk)
Milford Asset Management has been formally removed from the New Zealand Superannuation Fund (NZS) roster in what has been billed as an amicable divorce.
The news comes almost a year to the day since NZS suspended the NZ$281 million Milford NZ equities mandate in the wake of the Financial Markets Authority (FMA) investigation into alleged market manipulation practices at the boutique manager. Both the NZS and Milford described the formal separation as “amicable”.
According to an NZS spokesperson, the two parties “mutually agreed to part ways, effective 21 April 2016”.
“We consider that our active equity portfolio is adequately catered for through our in-house team and mandates with our existing two managers,” the NZS spokesperson said. “Milford has advised that it wishes to focus resources on managing New Zealand equities for its growing KiwiSaver, private wealth and other predominantly retail client groups.”
Anthony Quirk, outgoing Milford managing director, said the decision made sense in light of the two organisations’ “different business drivers”.
Quirk said Milford said capacity issues precluded the $3.6 billion boutique manager from seeking any further large NZ equities wholesale mandates.
“We have over $1 billion in NZ equities and taking on a large mandate can make it difficult to manage capacity,” he said. “With smaller steady flows it’s easier to handle.”
Quirk said Milford would continue to take on smaller wholesale clients in the NZ equity space.
The group has about 50 wholesale clients. Milford was also fast-approaching its record level of $3.68 billion under management, Quirk said.
Meanwhile, the NZS would officially absorb the former Milford mandate within its internal local equities unit – which manages both passive and active NZ shares – rather than redistribute the funds between the remaining incumbent external managers, Mint and Devon, or hire a new one.
“We have no current plans to appoint a third external fund manager to replace Milford,” the NZS spokesperson said.
“The parting is an amicable one and we expect that what has been a long-standing relationship will continue cordially, albeit not in an investor/manager sense.”
– David Chaplin, Investment News NZ
