Following up on its BNZ win in May, State Street Global Advisors (SSGA) has picked up the final large passive institutional mandate abandoned by Vanguard in NZ.
According to new disclosure documents, ASB will shift its indexed Australasian equities portfolio – of an estimated $4 billion plus – from current manager Vanguard to SSGA this month. The Commonwealth Bank of Australia-owned business already uses SSGA for international fixed income (although it currently has no exposure to longer-term government bonds).
Vanguard announced plans to close all its Australasian institutional mandates last October ahead of launching a retail superannuation scheme across the Tasman.
While Vanguard set a two-year transition period, its major NZ institutional clients – ANZ, BNZ and ASB – have all moved quickly to other suppliers for their passive exposures in KiwiSaver and other investment offerings.
ANZ was first off the mark, moving about $5 billion of passive global fixed income and equities money to factor-based mandates with Northern Trust in October 2020. In May this year BNZ, which also used Vanguard for global equities and bonds, hired SSGA as replacement, among a slew of other portfolio changes.
As at the end of March, ASB had about $13.6 billion under management in its KiwiSaver scheme and another $5 billion plus in other retail and superannuation master trust schemes.
About a quarter of the KiwiSaver money is in Australasian equities, equating to $3.4 billion, with perhaps another $1 billion or so in the asset class across its other funds.
The latest ASB fund documents also reveal a new, as yet unplaced, allocation to passive global listed infrastructure, rising from 2 per cent in its moderate portfolio to 6 per cent in the growth fund.
Aside from SSGA, ASB uses First Sentier (previously known as Colonial First State Global Asset Management under former owner, CBA) for cash and NZ fixed income and BlackRock in the global equities, emerging market shares and listed property asset classes.
ASB also runs a specialist ‘positive impact’ portfolio, designed by Mercer, that invests via an actively manager Mercer global shares strategy and an allocation to the Vanguard Ethically Conscious Global Aggregate Bond Index Fund.
Despite closing off its mandate services in Australia and NZ, Vanguard continues to offer pooled funds, structured as Australian unit trusts, to all investors in the region.
ASB could take a slight dent to funds under management later this year after missing out on reappointment as a default KiwiSaver in May. Under the transition rules, ASB will have to relinquish all default members who have not yet made an ‘active choice’ for redistribution among the six winning schemes – BNZ, Booster, Kiwi Wealth, Smartshares (aka SuperLife), Simplicity and Westpac.
Post the default announcement, Adam Boyd, ASB head of wealth, for instance, said in a release: “At this point in the evolution of KiwiSaver, we’re very focused on ensuring we can invest to support our existing customers who make an active choice to invest with ASB Kiwisaver.”