Nikko Asset Management NZ is planning to roll out a new global equity fund to local clients managed by its parent-owned Edinburgh-based investment team.
Currently, the Nikko NZ offshore shares solution centres on a “multi-manager global equity strategy, managed by a specialist team based in Sydney and Singapore”, according to the group’s website.
However, the $245 million Nikko NZ global equity fund – which features WCM Investment Management, Principal Global Investors, Epoch Investment Partners, and Davis Selected Advisors as underlying managers – is something of an anomaly in the wider group where other jurisdictions offer the concentrated portfolio managed from Edinburgh.
Presenting last week at the Nikko NZ annual ‘investment summit’ Will Low, Nikko head of global equities, outlined the manager’s approach.
Typically, the Nikko global fund holds between 40-60 stocks weighted according to expected alpha generation.
Low told the NZ audience the Nikko team sought “underestimated growth” with current themes including healthcare, infrastructure, data, defence spending, and emerging market consumption.
He said the fund’s largest overweight was currently in healthcare (7.7 per cent) while financials (-4.6 per cent) represented the biggest underweight sector position. Overall, the Nikko global fund has averaged an ‘active share’ – representing benchmark-unaware credentials – of 94 per cent, Low told the NZ audience.
The Nikko global fund factsheet says: “Investment opportunities are not defined by the prescriptive nature of benchmarks.
“The team believes that alpha can be sourced from any company across the geographical and market capitalisation spectrum. Team members are fundamental, longterm investors who focus on bottom-up stock selection with an element of top-down input.”
Assuming Nikko formally approves the decision, the NZ version of the global fund could be available as early as May, a spokesperson for the group said. It is understood the product would include environmental, social and governance (ESG) filters with tobacco exclusion – similar to the change announced by AMP Capital earlier in March – a possibility.
Last week, BNZ also revealed its new ESG framework that has excluded investments in companies “involved in the production of cluster munitions, anti-personnel mines, nuclear weapons and tobacco or tobacco products”, the bank said in a statement.
BNZ Head of Wealth and Private Bank Donna Nicolof, said the ban extends to the bank’s $1 billion KiwiSaver scheme – mostly managed by Russell Investments – and the $3 billion plus of private wealth investments.
Nicolof said the bank’s new scale – which has seen funds under management jump from $1.5 billion to more than $4 billion in 3.5 years – enabled it to “establish discrete mandates with investment managers”.
She said the change meant the bank could more easily implement its revised ESG overlay.
“One of our key investment beliefs is that risk and return are equally important and we have made the decision to exclude companies involved in the manufacture of tobacco on the basis that there is no safe level of use and engagement with these companies is futile,” Nicolof said in the statement. “The regulatory and litigation risks faced by this industry are significant.”