A key architect of the compulsory retirement savings system lauds its many achievements, stretching from the national economy to the individual. Where it’s double faulting is in serving members – and it needs to be addressed promptly.
With performance and diversification driving demand, these funds are expected to experience four-fold global growth over the next decade to nearly $AU65 trillion.
There can be only one: NZ’s $30b ACC to cut custodian
(Pictured: Bruce Watson)
by David Chaplin*
At least one of the $NZ30 billion plus Accident Compensation Corporation (ACC) investment fund’s two custodians is set to lose out as the Government-owned entity rejigs its back-office. Meantime, Australia’s AUSCOAL Super, also a JP Morgan client, goes to tender this week.
In New Zealand, it appears to be a winner-takes-all contest. ACC’s incumbent custodians – JP Morgan and Northern Trust – will have to fend off external applicants as well as each other to secure the single custody position on offer. Industry sources tipped JPMorgan as the front-runner, but BNP Paribas has a strong presence in NZ and could be a surprise winner. But so could State Street, or Northern Trust for that matter.
“ACC Investments currently utilises two custodians – JP Morgan for our Australian and New Zealand portfolios and Northern Trust for our global portfolios,” an ACC spokesperson said. “Based on our future business needs, ACC has decided to tender a contract for one custodian to provide custody and fund administration services for all our investment portfolios.”
While the tender closed last August, the spokesperson said the winner would not be revealed until “in or around July 2015”.
In its tender brief, the ACC said it was seeking a “forward thinking custodian with a global business model that has the ability to support ACC locally and bring new ideas to enhance ACC’s investment operating model”.
As well as the incumbents, probable applicants for the expanded ACC custody contract include both BNP Paribas and State Street.
Northern Trust recently celebrated 20 years providing master custody services to the ACC fund with the Chicago-based firm also picking up the New Zealand Superannuation Fund (NZS) custodial role in 2007. JP Morgan replaced Trustees Executors as ACC’s Australasian custodian in 2008.
Meantime, AUSCOAL is being advised by Brett Elvish, the specialist consultant and principal of Financial Viewpoint.
Bruce Watson, AUSCOAL’s chief executive, said last week: “Whilst we are happy with JP Morgan it is appropriate to consider where the custody industry has evolved and ensure that our custody partner is well placed for delivering value into the future. We have invited JPM, State Street, Citi, Northern Trust and NAS [NAB] to meet with us on Monday [February 16] to discuss the process. AUSCOAL hopes to have detailed responses within a month to allow consideration of such responses.”
AUSCOAL is a Mercer client, with that firm providing both asset consulting and actuarial services to the industry fund.
*David Chaplin is the publisher of Investment News NZ.
