The Nicholas Bagnall-run Te Ahumairangi Global Equity Fund has pushed above the $100 million barrier after landing several wholesale clients of late and bringing the boutique’s total assets under management to more than $2.2 billion.
Bagnall said the portfolio investment entity (PIE) vehicle, launched in November 2021, secured support from two local fund managers as well as iwi, financial advisers and other wholesale clients.
“At the moment we have more money invested from wholesale clients than retail ones,” he said.
Te Ahumairangi was seeded with a $1.8 billion mandate from Bagnall’s former employer, the Accident Compensation Corporation (ACC) fund, early in 2020 under a 12-month exclusivity period.
He served as ACC chief investment officer for 26 years before quitting late in 2019 to start the new boutique, which follows the value-tilted, low-volatility global shares style Bagnall honed during his tenure at the government fund.
While ACC remains the cornerstone client, he said the PIE fund – hosted on FundRock NZ (formerly known as Implemented Investment Solutions) – had enabled Te Ahumairangi to significantly diversify its customer base.
The Te Ahumairangi closely tracks the ACC mandate with a few “subtle differences”, Bagnall said, due to specific low-carbon benchmark targets: currently the PIE fund holds 171 stocks compared to 195 in the ACC portfolio.
Regardless, the PIE fund went live in November 2021 amid market tailwinds that favoured the Te Ahumairangi value bent with annualised returns since inception to the end of March this year topping 10.25 per cent versus 3.4 per cent for the benchmark (a 50:50 blend of the MSCI World Index and the MSCI World Minimum Volatility NZD Index).
Despite less favourable investment weather for value investors this year, Bagnall said the strategy has continued to outperform.
“Our performance attribution shows most of the performance has been due to stock-specific factors rather than country or sector exposures,” he said.
The low-risk value style has seen the fund lean to sectors such as consumer staples, telcos and financials – although not US regional banks.
“In fact, our financials exposure has helped the portfolio in aggregate this year,” Bagnall said.
Turnover has also been lower than forecast at just 10 per cent.
“We would expect the portfolio to have annual turnover in the 20 per cent range,” he said, with the discrepancy due to cash flow management in the fund.
At any rate, Bagnall said most of the portfolio shifts occur as the manager adjusts existing holdings rather than adding new positions.
“Managers tend to make better buy and sell decisions on the companies they’re already familiar with,” he said. “The danger always comes with new stocks.”
And while Bagnall is well-known in the NZ investment industry, Te Ahumairangi is not quite yet a household name for retail investors.
However, the fund is beginning to see flows through investment platforms and the InvestNow KiwiSaver scheme where it listed more than a year ago.
“It has been great for the team to be able to invest alongside our clients via their KiwiSaver portfolios,” Bagnall said. “The staff and directors have over $6 million of their own money invested in the Te Ahumairangi Global Equity Fund.”
The Te Ahumairangi fund is also available on the InvestNow and the former MMC Wealth platforms – both now part of the global Apex Group – with plans to list on other services soon.