Some members are excited for retirement, while others approach it with a “real sense of shame and fear”. Funds are going to have to figure out how to cater to both groups or risk failing them all.
If there’s one lesson for investors from the past five years, it’s that chopping and changing their strategy – even in the face of massive market turmoil – doesn’t always pay.
Fund managers gaining traction in $6b ‘iwi’ market
by David Chaplin
NZ fund managers have gained a tenuous toehold in the approximately NZ$6 billion (A$5.8 billion) ‘iwi’ investment market, the indigenous funds consisting mostly of real assets, according to Phil Barry, director of Wellington-based consultancy firm, TDB Advisory.
Barry said just-published TDB Advisory research into iwi assets found only two groups – the North Island east coast TÅ«hoe and NgÄti Porou – had significant allocations to third-party fund managers.
He said as the market matured it was possible other iwi would outsource more to external fund managers. “It could go both ways,” Barry said. “Those iwi that currently do just direct investments might seek diversification through external managers. But maybe those that are using fund managers might take more in-house as they gain confidence about investing themselves directly.”
The TDB study found TÅ«hoe had just over half of its roughly $330 million of net assets invested until this year in diversified portfolios managed by First NZ Capital and AMP Capital.
“A push for further diversification in 2016 has seen $55m moved to investments with ANZ and $15m to the passive fund of New Zealand Assets Management (NZAM),” the TDB report says.
Meanwhile, the study says NgÄti Porou had placed more than $130 million (or almost 60 per cent of total assets) with managers including “Milford Asset Management and BlackRock Investment Management”.
“[Last year] saw the amount invested by NgÄti Porou in these growth assets increase by $14m,” the TDB report says. Barry said there was a smattering of other smaller fund manager mandates – with a notable increase over the previous year – across the remaining six iwi included in the research.
“NgÄi Tahu and Tainui have invested smaller amounts with managers [about $10-20 million],” he said, with Mint Asset Management and Harbour as well as AMP, ANZ and Milford among the winners.
The inaugural TDB study estimated the Crown had paid out just over $2 billion across the approximately 60 Treaty of Waitangi iwi settlements finalised since 1990 with those assets growing to about $6 billion today.
“Even though we are reviewing only eight iwi, these eight iwi account for approximately 63 per cent of the total MÄori population in New Zealand (Census 2013) and manage approximately 70 per cent of total assets in the sector,” the report says.
The research found “considerable differences in the investment performances of the iwi over recent years” with annual returns over 2013-2016 for the eight entities ranging from the Auckland-centric NgÄti WhÄtua ÅŒrÄkei’s 16 per cent to a minus-7 per cent loss for the Wellington-based Port Nicholson Block. Most iwi assets were heavily concentrated in property and fishing rights, the TDB study shows.
The recent International Forum of Sovereign Wealth Funds (IFSWF) held in Auckland featured two sessions on iwi investments, which highlighted the challenges faced by asset managers in balancing internal politics, cultural priorities, current member financial needs and commercial investment decisions.
Barry said the TDB report would bring a new measure of transparency and performance benchmarking to the disparate iwi investment sector. “We’re breaking new ground with the report, which we plan to do every year from now,” he said.
In the 1990s the NZ government embarked on a series of negotiations with iwi (Maori tribes) to compensate for historical losses. To date, most iwi settlements – based on the 1840 Treaty of Waitangi agreement between the British Crown and Maori iwi – have included a mix of cash and real assets such as land or fishing rights.
– Investment News NZ
