Nikko Asset Management has shaken up the roster for its $300 million multi-manager global shares fund.
In a note to investors, George Carter, Nikko NZ chief, says following a review the global equity multi-manager fund dropped Epoch and Principal Global Investors (PGI) from the mix while appointing Royal London Asset Management (RLAM).
Nikko invested in a PGI growth strategy while Epoch provided a value tilt.
“We have lost confidence in Epoch’s and PGI’s ability to meet their performance objective and the Portfolio Solutions team [based in Sydney and Singapore] has recommended that Epoch and PGI be removed from the portfolio,” Carter says in the note. “Royal London’s relatively concentrated strategy employs a corporate lifecycle approach, and has a strong [environmental, social and governance] ESG focus.”
RLAM manages almost £120 billion on behalf of institutional and retail investors. The manager is part of the wider Royal London Mutual Insurance Society group, which describes itself as the UK’s “largest mutual life, pensions and investment company”.
RLAM offers a wide range of passive and active equity funds as well as investments in other asset classes. However, Nikko has invested in the RLAM global shares value strategy.
Carter said the global fund would now share the assets about equally among RLAM and the surviving managers – WCM Investment Management and Davis Selected Advisors.
He said RLAM was a value manager with a twist, enabling it to consider companies not just on the traditional price-to-earnings metrics associated with the investment style.
“They look at companies at different stages of their life-cycles,” Carter said. “For example, they can include start-ups, which aren’t typically included in value portfolios. They consider there is value in each life-cycle ‘bucket’.”
According to the RLAM website, the global equities team follows a philosophy that companies “tend to progress along a life cycle” following five broad stages dubbed:
- accelerating – requiring heavy investment to grow;
- compounding – a possible “sweet spot” for global share investors with high returns and rapid growth on offer;
- slowing and maturing – where increasing competition cuts into returns;
- mature – the long-term fate of most companies resulting in returns about equal with “their cost of capital”; and,
- turnaround – involving restructuring to boost returns and avoid collapse.
In addition to the international equities multi-manager product, Nikko NZ also offers a concentrated Global Shares Fund – managed by the group’s in-house team based in Edinburgh.
Carter said both global shares products – structured as portfolio investment entities – would remain on the shelf as long as there was investor demand.
“Some investors want the multi-manager fund, some prefer the concentrated fund – others use both,” he said.
Over the 12 months to September 30 the Nikko multi-manager fund was just under the par benchmark return of 19.7 per cent while the concentrated fund hit 23.75 per cent – both after fees but before tax figures.
Nikko NZ manages over $5 billion mostly on behalf of institutional investors. The manager also launched a KiwiSaver scheme earlier this year with funds under management now approaching $6 million.
Next month Nikko should also go live with a newly-developed robo-advice service – branded as Goalsgetter – offered under the Financial Markets Authority (FMA) exemption. Kiwi Wealth and Cigna have also earned FMA approval to provide robo-advice services.