Nikko Asset Management NZ has closed its Australasian Small Companies Fund citing flagging demand and cost concerns.
Established in 2009, the Nikko Australasian small cap fund officially wound up in March with a little over $1 million on the books.
George Carter, Nikko NZ chief, said just prior to closing the fund had about $5 million under management, down from its all-time peak of $25 million or so.
“It was hard to justify keeping the fund running on cost grounds when feedback from our clients indicated that the Australasian small caps product would unlikely to attract much interest,” Carter said.
He said while the Nikko fund had a decent long-term performance track record – returning 8.3 per cent after fees and tax since inception compared to the benchmark 4.61 per cent – investors interested in the asset class typically sought out specialist managers to fill that need.
“Australasian small caps is a niche where Australian-domiciled firms, who are closer to where most of the small company stocks are, have typically attracted NZ retail investors,” Carter said. “Institutions don’t allocate specifically to that sector. And while we’re growing our retail presence we’re still weighted towards the institutional market.”
Nikko has been the fastest-growing manager in the NZ retail space of late, according to Australian research firm, Strategic Insight, albeit from a low base.
Carter said Nikko did sound out adviser demand for putting the Australasian small caps fund on platforms before shuttering the product.
“There was no high degree of interest,” he said.
The Nikko Australasian small cap fund was run by the Auckland-based equities team headed by Stuart Williams.