NZAM has fronted a local version of the Kapstream absolute return global fixed income fund co-founded by former CIO of PIMCO Australia, Kumar Palghat.
Due to formally launch on April 3, the NZAM Kapstream Absolute Return Income Fund is denominated in NZ currency and would be tax-effective for local investors under a portfolio investment entity (PIE) structure.
According to Andy Morris, NZAM principal, the Kapstream absolute return philosophy chimed with the Auckland-based global multi-manager’s alternative approach.
Morris said the Kapstream fund, which launched in Australia in 2006 after Palghat along with business development manager Nick Maroutsos defected from PIMCO to head the new venture, would be a good fit for NZ investors looking for yield as conventional fixed income strategies came under pressure.
He said with global interest rates on the rise and NZ term deposits unlikely to offer much respite for income investors, the time was ripe for an alternative option.
“For the same reasons the Kapstream fund has received widespread support in Australia, we think the timing is ideal for making it available to New Zealand investors” Morris said in a statement. “With an almost 10-year track record and positive returns delivered in 110 of its 116 month life, the fund has more than proven its ability both to preserve capital and generate a stable income stream – regardless of what’s going on in the world.”
The NZAM Kapstream product disclosure statement (PDS) says the fund has “an emphasis on investing in a global diversified portfolio of predominantly investment grade fixed income securities”.
“The strategy aims to generate returns that are superior to cash and cash-like securities while preserving capital,” the PDS says.
Total cost for the new NZ Kapstream product would be 0.7 per cent, the PDS says, including the 0.4 per cent (plus GST) NZAM management fee.
NZAM would seed the fund with about $20 million but Morris said he expected the Kapstream approach would appeal to a wide range of other NZ wholesale investors and advisory groups.
He said the fund could fill the role as a cash/term deposit alternative as well as a replacement for more conventional fixed income strategies.
In the release, James Bloom, Kapstream director of investment strategy, said given NZAM’s “deeply established relationships” in New Zealand and the two firms’ shared “absolute return mindset”, the decision “to forge a partnership was an easy one”.
Kapstream, which has about A$10 billion under management, is 100 per cent owned by the Janus Capital Group, which lured former PIMCO chief, Bill Gross, to run an absolute return bond fund in 2014.
Janus is also currently involved in merger negotiations with fellow listed firm, Henderson Group. In a report last week, Institutional Investor said about one in 10 jobs could go across a combined group following the merger, expected to complete in May.
As well as its expanding range of PIE funds, NZAM, previously known as NZ Assets Management, runs individual accounts for wholesale clients. NZAM recently made its Global Growth Fund available via the Craigs Investment Partners KiwiSaver scheme.