Northern Trust has emerged as the surprise replacement for Vanguard in the ANZ Investments passive investment suite.
As reported earlier this month, Vanguard is dumping all institutional mandates in Australia and NZ, leaving billions of dollars of KiwiSaver – and other – investments in limbo.
While BlackRock was favourite to win most of the abandoned Vanguard money, ANZ confirmed Northern Trust had taken over index duties for a range of fixed income and global equities portfolios.
In a release, ANZ chief investment officer, Paul Huxford, said: “We have been working for some time on enhancing the investment approach for these portfolios. We wanted to incorporate more active management, as well as an increased level of focus on ESG factors and climate change considerations.”
Under the deal, Northern Trust had assumed control of an estimated $5 billion of ANZ money held across three asset classes: global fixed income; international credit; and, offshore equities (for the ANZ default KiwiSaver scheme only).
ANZ transitioned the Vanguard mandates over the last two weeks.
Huxford said the Northern Trust mandate included some “added value expectations” as well as strong integration of environmental, social and governance (ESG) and climate change factors.
In particular, the Northern Trust global credit mandate followed a ‘factor-based’ approach, the release says. Northern Trust currently runs over $6 billion for the NZ Superannuation Fund along factor-tilted and index guidelines.
The ANZ default fund would further benefit from Northern Trust’s “quality-ESG international equities strategy, which also takes into consideration ESG factors and reduces the carbon footprint of the fund”, the statement says.
ANZ is the first to move away from Vanguard with BNZ and ASB also looking for new passive managers in the wake of the recent shock announcement.
According to Huxford, the Northern Trust ESG and climate change facilities would add weight to ANZ’s responsible investment focus while improving “risk-adjusted returns”.
ANZ is the largest retail and KiwiSaver fund manager in NZ with more than $30 billion under management.