Just quietly over the last 12 months ANZ Investments pushed through the $30 billion mark, cementing its place as the country’s largest non-government fund manager.
Since last March, ANZ has seen a net gain of about $5 billion as booming markets and steady flows tipped funds under management above $33 billion.
Despite the apparently effortless growth trajectory, the Australian bank-owned fund juggernaut hit a few speed bumps over the last couple of years.
In particular, the departure of long-time CIO, Graham Ansell, early in 2018 along with other veteran investment staff, rocked the ANZ fund business. The depleted investment team, combined with a period of underperformance in some asset classes, saw ANZ lose some institutional mandates.
Of course, ANZ retail flows were shored up by the bank’s dominant KiwiSaver position, where it holds about a quarter of the total market funds and members through three schemes. Even in KiwiSaver, however, ANZ’s grip loosened a little as it gave up a point or two in market share.
At the same time, parent ANZ – like all Australian banks – was rapidly exiting the wealth management business back home in a trend supercharged by the Royal Commission into financial services (currently celebrating the one-year anniversary of its final report).
In the wake of the Royal Commission, and the Reserve Bank of NZ move forcing banks to cough up more capital, the ANZ Investments NZ unit was rumoured to be on the block.
But the ANZ gossip has faded into the background as a real sale – AMP NZ – and louder chatter (BNZ) take precedence.
Meanwhile, the ANZ investment business keeps trucking on.
Paul Huxford, who took over as interim CIO two years ago (later upgraded to permanent), said the now stable ANZ Investments team delivered solid returns last year.
For example, the December quarter Melville Jessup Weaver (MJW) investment survey ranked the ANZ KiwiSaver balanced, balanced growth and funds – that collectively manage about $8.3 billion – top in their respective categories for the 2019 calendar year. The ANZ balanced and balanced growth funds also headed the 10-year MJW performance charts.
By contrast, most ANZ KiwiSaver sat near the bottom of peer risk categories over the 2018 calendar year.
Global shares (where ANZ runs a multi-manager model) and listed property were stand-out asset classes for the group last year with middling results in Australasian shares.
Huxford said ANZ was slightly overweight global equities last year – a position it still holds early in 2020.
“Internationally there are a bunch of risks out there but there’s also a fair amount to be optimistic about,” he said.
In its recent 2020 outlook, ANZ says geopolitical unrest remains the biggest risk for the year ahead with the US elections likely to focus investor attention later in the year. The ANZ report also cites ongoing concerns about climate change to intensify this year.
“However, there is still a lot to be optimistic about both home and abroad. In a year where the word ‘recession’ was atop of many conversations, the global economy staved off these concerns,” the ANZ note says. “And although global growth is trending lower, we feel it is bottoming thanks to central bank accommodative policy and a pick-up in government spending.”
Regardless, ANZ has not changed its strategic asset allocation, Huxford said.
“Tactically, we make changes from time to time,” he said. “Last December, for example, we increased our overweight to equities but took off some of that again in January.”
The current bout of investor unease sparked by the global coronavirus scare would have short-term effects but Huxford said – to date – market reaction has been measured.
“There hasn’t been a washout,” he said. “Looking at the long term, we’re still happy with our overweight to global equities.”
ANZ is also happy with its current international shares line-up that includes MFS, Vontobel, Franklin Templeton and LSV.
Last year ANZ added a listed infrastructure fund to its manager mix, seeding the Australian firm Maple-Brown Abbott (MBA) with a $250 million mandate but Huxford said no other changes are on the horizon.
While KiwiSaver underpins ANZ growth in the retail market, he said the group was also back in the game with wholesale investors. Of the $33 billion plus under ANZ management about $3.5 billion is wholesale money.
Huxford heads an investment team of 30 or so, which has been largely unchanged since an initial period of volatility in 2018 that saw Maaike Van-Tol and Alan Clarke appointed as co-heads of diversified portfolio management. Iain Cox, Craig Tyson and Craig Brown head ANZ’s Australasian fixed interest, listed property and Australasian equities, respectively – although the latter has retained the role in an ‘acting’ capacity since the departure of his predecessor, Mark Brown, in 2017.
Most recently, ANZ hired Neal Burghardt as an equity analyst from the, slightly bigger, Accident Compensation Corporation (ACC) fund.