Mercer has stripped Milford Asset Management of an estimated $120 million wholesale NZ equities mandate as fallout from the Financial Markets Authority (FMA) investigation continues.
The change was noted in a slew of substantial shareholder notices lodged on the NZX this afternoon, including Wynard Group and Tourism Holdings.
Anthony Quirk said while the loss of the Mercer mandate was disappointing, wholesale money represented only about 15 per cent of the $3 billion plus Milford funds under management (FUM).
Quirk said following the June 18 publication of Milford’s $1.5 million settlement with the FMA, the manager has lost only a handful of small wholesale clients. The Milford Trans-Tasman Fund was also put on watch by retail researcher Morningstar last month after the firm’s founder and chair, Brian Gaynor, stepped in as portfolio manager following the sudden departure of incumbent, Mark Warminger.
He said in total Milford had returned about $130 million to institutional clients since the FMA settlement, of which the Mercer Trans-Tasman Shares Trust component was the majority.
According to Quirk, the Mercer funds were held in a separate account and would not affect any Milford pooled vehicles.
As well as Milford, the Mercer Trans-Tasman Shares Trust lists Devon Funds Management and Harbour Asset Management as underlying managers. Mercer has yet to reveal how the Milford allocation would be reinvested.
Milford still awaits notice of the fate of a $281 million NZ equities mandate currently in limbo with the New Zealand Superannuation Fund (NZS). The NZS took the Milford mandate in-house in April after news of the FMA investigation into alleged market manipulation activities became public.
Despite the wholesale losses, Quirk said Milford has experienced growth in its high net worth, retail and KiwiSaver businesses since the FMA settlement hit the news.
He said the manager would probably retain FUM of about $3 billion “although the mix [of clients] will change”.
“Mercer constantly monitors investment managers that we consider to be the best for a particular type of investment, I cannot confirm any changes to our manager line-up at this stage,” a Mercer spokesperson said.