Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
KiwiSaver, master trust schemes slated for sale
Aon has put its KiwiSaver and employer master trust schemes on the block, according to industry sources.
It is understood Aon has circulated an investment memorandum seeking interest in the group’s two schemes, which collectively manage about $920 million split between the $730 million KiwiSaver and $190 million master trust.
The move represents the first signs of re-consolidation in the KiwiSaver market following a few years of scheme proliferation. From a peak of about 50 schemes soon after the regime launched in 2007, the KiwiSaver market whittled down to just 29 in the 2017 reporting period. However, since 2019 a splurge of new providers has seen scheme numbers swell to 37 at the latest count, including four launches in the last 12 months alone.
Part of the global insurance broking and consultancy giant, Aon created two KiwiSaver schemes in 2007 under the AonSaver brands (with one housed under the group’s employer master trust structure). By 2014 the firm folded the two schemes into the single Aon KiwiSaver, which saw member numbers reach a high of just over 20,000 the following year.
Despite offering consistent high-performing funds through underlying managers Milford Asset Management and Russell Investments, the Aon scheme – distributed mainly through the group’s broker network – has struggled to gain momentum with member numbers gradually declining since 2015.
As at the end of March this year, the Aon KiwiSaver scheme reported $734 million under management spread across almost 19,250 members. Russell manages about $490 million of the Aon KiwiSaver through various ‘Lifepoint’ funds (that offer target retirement date-based asset allocation) with Milford responsible for just over $190 million: the remainder is shared between Nikko and ANZ.
The Aon master trust is the smallest by far of the six schemes operating in the employer super market with almost $193 million at the end of June this year, according to the latest EriksensGlobal survey. During the June quarter the employer super master trust market grew over $200 million to hit $8.5 billion, dominated by the $3.6 billion AMP NZ Retirement Trust. ASB ($1.8 billion), SuperLife ($1.4 billion), Mercer ($807 million) and Fisher Funds ($646 million) also compete in the super master trust game.
A spokesperson for Aon Australia, which is understood to be driving the sales process, said “we won’t be commenting” on the matter. Geoff Blampied heads the Aon NZ business.
Last month a proposed global merger between Aon and Willis Towers Watson collapsed in the wake of a US regulatory legal action.
