In a deal consummated months ago, insurance giant AIA NZ last week confirmed Smartshares in a $500 million mandate to manage its legacy investment-linked products.
It is understood that the NZX-owned investment house replaced a range of third-party managers appointed under the auspices of ASB with the money hitting Smartshares accounts as early as January.
Much of the AIA unit-linked book – valued at $513 million at the end of last year (down from $636 million the previous year) – came via the group’s 2018 purchase of the former ASB insurance subsidiary, Sovereign.
Len Elikhis, AIA NZ chief product and investments officer, said prior to Smartshares the business “used a mix of in-house and external managers across a broad range of jurisdictions”.
“Our partnership with Smartshares consolidates our investment-linked holdings onto a single platform whilst maintaining our preferred multi-manager investment approach,” Elikhis said. “In addition, all funds on the Smartshares platform are priced in NZD and available for trading and pricing during NZ business hours.”
AIA also named Trustees Executors as administrator for the unit-linked products last month, filling duties previously managed in-house.
Insurance products with a bundled investment component have long been superseded by term life policies but the contract terms generally lock-in customers for ‘whole-of-life’ with expensive get-out clauses, leaving a long tail of legacy policy-holders.
However, if an insurer significantly amends the underlying investment strategy – such as modifying the asset allocation – whole-of-life policies may be void.
The AIA statement confirms the Smartshares shift did not “affect the asset allocations” of the investment-linked policy-holders.
“AIA NZ customers will continue to receive a high level of service and should they have any questions or would like further information are advised to contact AIA NZ directly,” the release says.
But with more than 70 underlying portfolios to align with policy specifications, the transition to a new manager for the AIA investment-linked products was technically complex.
Stuart Millar, Smartshares chief investment officer, said in the statement, that the NZX fund manager had “been able to create bespoke investment strategies for AIA NZ’s existing range of unit-linked funds, and AIA NZ has gained operational efficiencies by using Smartshares’ platform to automate the allocation of cashflows in an accurate and timely manner”.
Over the last couple of years Smartshares has won a handful of large investment mandates, notably several Pacific Island pension funds including the Cook Islands National Superannuation Fund last September.
As at the end of August, Smartshares reported almost $10.8 billion under management – up 34 per cent year-on-year mostly on the back its $30 million plus purchase of the $1.6 billion QuayStreet from Craigs Investment Partners and the AIA deal.
The NZX funds under management data also includes the approximately $1.8 billion accrued following its $25 million buyout of the ASB superannuation master trust late in 2021 – renamed under the SuperLife brand.
While the SuperLife master trust money has been counted in the NZX statistics since the deal was completed in February 2022, the manager only transitioned the money to Smartshares funds from ASB products last month, according to the latest scheme documents.
Former Hobson Wealth chief operating officer, Anna Scott, took over as Smartshares head in September, filling the vacancy left by the departure of Hugh Stevens this March. Stevens resigned in January after serving five years in the top NZX funds job.