AMP Capital NZ has put three tax-efficient index funds on the retail menu for all-in fees ranging from 0.33 to 0.39 per cent and a $50 minimum investment following a surge in demand.
Grant Hassell, AMP Capital NZ chief, said the three new index funds – covering NZ and global equities as well as international fixed income – were retail versions of existing wholesale models.
“We transitioned a whole lot of funds to the FMC [Financial Markets Conduct Act] environment but not the index products,” Hassell said. “But there’s been a lot more demand than we expected from retail investors [for passive options] so we’re playing catch-up by launching these three funds.”
The three funds – the All Country Global Shares Index, the Hedged Global Fixed Interest Fund, and the NZ Shares Index Fund – would be available via AMP Capital direct and on the InvestNow platform. In a statement, AMP Capital says the three funds would track the MSCI All Country World Index ex Tobacco Index, Bloomberg Barclays Global Aggregate Bond Index (fully hedged), and the S&P/NZX 50, respectively.
“AMP Capital is committed to delivering both active and passive capabilities that match our clients’ needs as we recognise the role they both play in a diversified portfolio,” Hassell said in a statement. “Introducing the three additional index funds to retail investors enables us to offer these capabilities to a wider universe of clients seeking low-cost exposure to these asset classes.”
This April AMP Capital hired UBS as the underlying manager for its index exposures, swapping out State Street from the-then $17 billion mandate. However, while UBS manages global passive exposure for the new AMP Capital NZ index funds, the local equities component would be managed in-house.
According to official documents, the AMP Capital NZ equities index fund invests in Australasian shares including “any New Zealand domiciled listed or unlisted company, together with any non-New Zealand (including Australian) domiciled company with a listing on the New Zealand Stock Exchange. New Zealand shares also include futures and options on such shares.”
The new index funds were all portfolio investment entities (PIEs) invested via locally-domiciled segregated mandates with underlying managers allowing “any foreign and New Zealand tax credits to flow through to the New Zealand vehicle”, the statement says.
“This also provides control over the investment guidelines, allowing the funds to be easily set up to exclude prohibitive investments including tobacco, which is excluded under AMP Capital’s ethical framework,” AMP Capital says in the release.
Concurrently, AMP Capital NZ also changed its active global fixed income fund with its in-house Australian team joining the multi-manager line-up.
AMP Capital Australia will manage global sovereign bonds for the fund alongside incumbent, Colchester.
“Diversifying the global sovereign bonds segment between two equally-weighted managers provides greater diversification and a smoother return profile,” the statement says.
Under the revised approach the global fixed interest fund will follow AMP Capital’s responsible investment charter.
Government bonds represent about 60 per cent of AMP Capital’s $82 million hedged global fixed income fund with the remainder managed by Morgan Stanley via a global credit mandate (25 per cent) and Wellington’s global securitised allocation. Following the manager changes AMP Capital says it plans to replace the Bloomberg Barclays Global Aggregate Index with a new “composite benchmark will align benchmark weightings with the underlying managers’ objectives and strategies”.
AMP Capital NZ also outsources management to PIMCO for its $200 million global short duration fund.