Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Mercer wins $256m NZ fund investment outsourcing
by David Chaplin
Mercer will take charge on March 1 of the NZ$270 million (A$256 million) New Plymouth District Council portfolio previously managed by in-house entity, Taranaki Investment Management Limited (TIML), after a competitive tender.
In a statement, the New Plymouth Council has confirmed Mercer is the winner of New Zealand’s last major wholesale mandate of 2016.
“The appointment of Mercer followed a rigorous process over the past two months by the newly appointed Guardians who were assisted by consulting actuaries, Melville Jessup Weaver (MJW),” the Council statement says.
It is understood Mercer beat out rival short-listed candidates Russell Investments and Cambridge Associates for the coveted role as “full outsource agent” for the Council’s Perpetual Investment Fund (PIF).
Come March 1, TIML will be disbanded as the new PIF Guardians board, headed by Local Government Funding Agency chief, Mark Butcher, assumes responsibility for the fund’s governance.
As reported in December, the New Plymouth Council earlier hired MJW to draw up a new strategic asset allocation (SAA) for the PIF.
The MJW SAA cut exposure to both Australasian shares and NZ property to zero, from the current respective allocations of 10 per cent and 20 per cent, with global equities rising from 20 per cent to 38.5 per cent of the portfolio. The emerging markets allocation dropped from 10 per cent to 6.5 per cent.
At the same time, MJW reduced the current 30 per cent SAA private equity target to 17.5 per cent with a new ‘alternatives’ exposure receiving the same weight. The MJW SAA also raised the PIF fixed income exposure from the current 5 per cent to 15 per cent, according to Council notes.
“Despite a lower allocation to growth assets, the expected return and risk modelling undertaken by MJW suggests a slightly higher return and lower risk profile from the proposed portfolio,” the Council document says.
TIML deviated considerably from previous SAA guidelines after sinking almost 70 per cent of the PIF into Tasmanian dairy farms. However, the sometimes-controversial TIML booked about $90 million in profit on the Tasmanian venture after selling down the assets for net proceeds of almost $195 million last year.
Following the sale roughly $200 million of the PIF has been sitting in cash.
– Investment News New Zealand
