As flagged late last year, AMP Capital will shut down its $150 million Strategic NZ Shares Fund.
Grant Hassell, AMP Capital NZ chief, said investors in the product could either transfer to the group’s NZ Shares Fund or sell down their holdings.
“There will be no cost to investors to transition to the AMP Capital NZ Shares Fund,” Hassell said. “Those investors who decide to redeem their units will incur the normal exit fees which apply to the fund, while those who remain in the fund until it is wound up will be paid out their value in the fund after wind up costs.”
He said investors in both funds should benefit from lower overall costs if Strategic investors switch to the $490 million NZ Shares fund.
The Strategic NZ Shares fund, launched in 2001, recorded total annual costs of 1.04 per cent compared to 0.78 per cent for the NZ Shares product.
In a new document on the Disclose website, AMP says Strategic investors have until April 30 this year to transfer to the NZ Shares fund.
Those Strategic investors who elect to sell-down units (incurring a 0.35 per cent sell spread) would need to file redemption requests the end of business on May 10, the Disclose document says.
“Existing investors who do not choose either option will, from the ‘Vesting Day’ of 11 May 2016, have their ability to redeem their Units in the Strategic NZ Shares Fund suspended while the assets of the Strategic NZ Shares Fund are realised, the liabilities of the Strategic NZ Shares Fund (including the costs of the winding up) settled and the remaining cash distributed to Investors,” AMP says. “This process can take up to three months to complete.”
Hassell said rationale for keeping both funds open had diminished in recent years with underlying holdings and portfolio weights of the two products now showing “comprehensive overlap”.
He said when AMP launched the Strategic fund in 2001 the accepted benchmark at the time – the NZSE 40 Gross Index – was dominated by a single company, Telecom, with the top 10 stocks representing 60 per cent of the total.
“In response, AMP Capital launched the Strategic NZ Shares Fund, which was managed against the NZSE 40 Portfolio Index, an index which tracked the top 40 companies on a more equally-weighted basis,” Hassell said.
“Today, there is less difference between the weightings of the two indices (now changed to S&P/NZX indices), and the portfolios of our New Zealand shares funds have become so closely aligned there is no longer a need for two separate funds.”
Over the five years to the end of December 2015 the Strategic and NZ Shares funds reported gross returns of 15.98 per cent and 16 per cent, respectively. During the 2015 calendar year the Strategic fund returned 17.34 per cent compared to 15.92 per cent for the NZ Shares product.
The NZ Shares Fund launched in 1995. In 2012, AMP Capital also released the Responsible Leaders NZ Shares Fund, which currently has funds under management of about $11 million.
In May last year AMP appointed Salt Funds Management to run NZ equities after disbanding its in-house team.
Hassell said the closure of the Strategic fund would have no impact on Salt.