The NZX-owned Smartshares has teamed up with the world’s largest asset manager to launch a new batch of exchange-traded funds (ETFs) next month.
It is understood the suite of BlackRock i-Shares ETFs includes a few environmental, social and governance (ESG) flavoured offshore equity funds, a passive global bond product and ‘thematic’ funds covering innovative technology and healthcare sectors.
SuperLife, the KiwiSaver and super fund member of the NZX-Smartshares family, will seed the new BlackRock-backed ETFs. Last week SuperLife switched to a new structure, reported here in February, that untangled the underlying funds from an overarching superannuation structure. The new SuperLife documents confirm MyFiduciary and Eriksen and Associates as investment advisers.
The NZX already offers 23 Smartshares ETFs with most global asset classes feeding into products managed by Vanguard, the world’s second-largest fund manager.
Last week, Mark Peterson, NZX chief, told the crowd attending the firm’s annual general meeting (AGM) in Dunedin that Smartshares grew operating earnings by 29 per cent in 2018 with funds under management now approaching $3.2 billion.
Peterson also confirmed the NZX was in talks to establish two new “trading and clearing” players on the bourse – Sharesies and Tiger Financial. As reported last week on Investment News NZ, both Sharesies and a platform dubbed ShareMeUp (backed by Link technology) were trialing online NZX stock broking services.
It appears the Chinese-based Nasdaq-listed Tiger (which trades as Up Fintech) is behind the ShareMeUp service. In a Nasdaq filing ahead of its IPO this February, Up Fintech said it planned to use about 15 per cent of a target US$115 million share float “to satisfy the increased capital adequacy requirements pursuant to the New Zealand Stock Exchange or regulators in other jurisdictions”.
In its prospectus, Up Fintech claims to be the world’s largest online broker for Chinese investors for US share trading with a market share of almost 60 per cent.
Peterson told the NZX AGM both Sharesies and Tiger would “bring new trading flows to the market”.
“Sharesies is focused on a new area of the New Zealand retail investor market, and Tiger Financial has a large Asian retail investor client base,” he said.
The NZX chief also talked up the prospects of the group’s Wealth Technologies investment platform, touting a deal “pipeline” stretching to $40 billion.
“To give some more colour on Wealth Technologies, we are pitching for approximately $32 billion in funds under administration, and are talking to additional potential customers who have a further $8 billion,” Peterson said.
Wealth Technologies doubled its funds under administration to $2 billion late last year after Craigs Investment Partners shifted about $1 billion across to a newly-built system that will eventually accommodate all the NZX platform money.
Collectively, the NZ share-broking industry – the natural NZX target market – manages around $40 billion across funds and direct securities.
Peterson said NZX was also “in the final phases of accrediting a large global custodian who will join the market as a depository participant”.
Once accredited, the custodian, understood to be BNP Paribas Securities Services, “positions NZX’s Central Securities Depository as the most efficient and leading post trade service in New Zealand”, he told the AGM.
However, Peterson didn’t tell the AGM about the fate of the NZX-owned research house, FundSource, whose sale has been ‘imminent’ for several years. According to industry insiders, the research unit has attracted the attention of up to three bidders including Australian parties.