A strong referral line via its parent Kiwibank has spurred growth in Gareth Morgan Investments (GMI) wholesale business, according to the group’s chief investment officer, Simon O’Grady.
O’Grady said GMI had been winning a steady stream of wholesale mandates ($10 million plus) – often after bank referrals – prompting the appointment last week of ex AMP Capital NZ multi asset chief, Peter Verhaart, in the new role of head of implemented investment.
“I’ve been looking for someone to fill the implemented investment role for some time,” he said. “And when Peter became available, I contacted him to see if he was interested.”
Verhaart will take up the new position in May after completing a month’s gardening leave from AMP Capital.
O’Grady said Verhaart’s duties would be focused on creating solutions for GMI wholesale clients including trusts, charities and iwi rather than a hands-on money management role.
He said product selection and asset allocation would remain the preserve of GMI’s nine-strong investment team: a group that includes head of investment strategy, Susan Eaton; Diana Gordon, head of fixed income; head of equities, Nathan Field; and, quant strategist, Steffan Berridge.
GMI, a subsidiary of the Kiwibank-owned Kiwi Wealth Management, manages almost $4 billion, of which about $2.4 billion is sourced from the group’s KiwiSaver scheme. GMI is New Zealand’s eight-largest investment management entity based on FundSource figures. Excluding about $50 million invested in the GMI super fund (a UK qualifying registered overseas pension scheme – or QROPS), the remaining funds are invested via the firm’s private portfolio service.
O’Grady said the GMI investment approach has evolved since Kiwibank bought the business from founder, Gareth Morgan, in 2012 to include a broader range of pooled vehicles compared to the original focus on direct holdings of underlying securities.
“We haven’t necessarily moved away from the principles of Gareth,” he said. “For example, he invested in cheap beta funds which we have retained… But it became apparent that – especially in fixed income – you can’t build a solution without using pooled vehicles.”
While Gareth Morgan relinquished day-to-day control in the business and resigned as a director in 2013 he remains on the GMI investment governance and “assurance, risk and compliance” committees.
GMI currently invests in a range of exchange-traded funds, listed investment companies as well as number of specialist unlisted managers such as GMO and hedge fund Man AH.
O’Grady said GMI maintained a flexible approach to in-house or outsourced investment management, working with clients to build bespoke solutions if necessary.
For instance, he said GMI head of equities, Nathan Field, has built a range of in-house quasi-index portfolios for local and global shares.
“We can do some beta cheaper ourselves rather than buying an external product,” O’Grady said. “We’ve inherited an open mandate to build better portfolios.”
He said the group was “outcomes-focused” with risk budgeting a primary concern.
GMI intended to further boost its investment team this year, O’Grady said.
The group has been approved as a discretionary investment management service (DIMS) provider with its managed investment scheme (MIS) licence application currently being processed.
Last week, Kiwibank’s ultimate parent, NZ Post, announced plans to spin off 45 per cent of the bank (controlled via the Kiwi Group Holdings entity) to the NZ Superannuation Fund (NZS) and the ACC. Under the proposed deal, NZS and the ACC fund would take up 25 per cent and 20 per cent, respectively, for a total consideration of $495 million.
In a statement, GMI said while it would be “business as usual” under the mooted new ownership structure, the deal could have other benefits for the investment arm.
“The proposal potentially gives us new shareholders whose long-term investment horizons, expertise and access to capital will be positive for GMI and Kiwi Wealth,” the GMI statement says.