A new international shares player has formally entered the wider NZ market following the launch of the Te Ahumairangi Investment Management (TAIM) fund last week.
The Te Ahumairangi Global Equity Fund closely tracks an institutional strategy the firm has managed for the Accident Compensation Corporation (ACC) since the middle of last year, according to chief, Nicholas Bagnall.
Bagnall resigned as ACC chief investment officer late in 2019 after a 26-year career at the government fund, launching TAIM with the backing of a substantial mandate from his former employer under a 12-month exclusivity deal that ended this August.
He said the new TAIM product, issued by fund-hosting firm Implemented Investment Solutions (IIS), will have a “high overlap” with the now $2 billion plus ACC portfolio.
“At day one, we’ll have about 160 to 170 stocks in the new fund,” Bagnall said, compared to about 230 in the current ACC mandate managed by TAIM – the difference made up of mainly smaller companies.
Despite limited marketing to date, he said there had been some interest from a range of investors in the new fund.
“We think it should appeal to all investors,” Bagnall said. “From what I’ve observed most private client global shares portfolios are heavily weighted to mega-cap US technology companies and our [value-tilted] strategy is a natural diversifier.”
Since taking over the ACC mandate, he said the portfolio has performed in line with the benchmark – an equally split composite of the MSCI World and Minimum Volatility indices “optimised for NZ dollar based investors”, according to fund disclosure documents.
“Te Ahumairangi tilts its portfolio towards companies that have average or lower-than-average risk characteristics, whilst generally avoiding the riskiest and most volatile equity securities, as it believes that the historical tendency of higher-risk equities to deliver a relatively poor reward-for-risk is likely to continue in the future,” the disclosure material says.
“… Rather than simply relying on a few bold investment calls, Te Ahumairangi uses various approaches to add a little bit of extra value, such as finding securities that offer relatively cheap means of obtaining desired investment exposures, and by emphasising good (low impact) and timely execution of trades.”
And Bagnall said TAIM would stick to its global equities focus with no plans to add other asset classes.
“My view is that it’s best to focus on just one strategy rather than offering many different products – especially if [portfolio managers] have to look after multiple strategies,” he said.
The TAIM fund also sits at the low-end of the price bracket for global share funds with an annual management fee of 0.6 per cent (plus GST that could add an estimated 0.04 per cent).
“Fees are very important in delivering long-term value to investors,” Bagnall said. “I believe fees [for the TAIM actively managed fund] can provide that value at a price only moderately higher than passive strategies.”
As well as IIS providing the legal product framework, the TAIM fund uses MMC for registry, BNP Paribas as custodian and administrator, and Public Trust as supervisor.
“We also use the Bloomberg AIM system,” he said.
The Wellington-based firm currently has four investment staff including Bagnall, analyst, Prithvi Sharma, along with two senior analysts, Ian Graham and Jack Crowley.
While the fund officially launched on October 27, TAIM is awaiting final sign-off on disclosure materials from the Financial Markets Authority before accepting investments.
Once-approved, investors with at least $100,000 to allocate can apply direct to TAIM but the fund will also be available on the IIS-owned InvestNow platform at a $50 initial minimum.