The almost $700 million NZBritannia has added ANZ Investments to its roster, hiring the bank-owned manager to share duties across a range of asset classes with incumbents among a slew of changes at the UK pension transfer specialist.
Now rebranded as NZBritannia from the previous Britannia Financial Services, the country’s largest UK pension transfer business formerly invested via IOOF, Dimensional Fund Advisors (DFA) and Harbour Asset Management.
However, Gavin Dixon, NZBritannia chief, said the group had diversified the investment offering following a review conducted by consultancy firm Melville Jessup Weaver (MJW) earlier this year.
Dixon said the NZBritannia portfolios, which support three superannuation schemes (although only one is open to new members), had skewed over time to Australasian equities while offshore shares in general had a value bias.
Under the new mandate, ANZ would provide “a range of investment solutions for domestic and international equities, along with global infrastructure and property”, according to a release.
For example, NZBritannia would split its roughly $360 million offshore shares portfolio between ANZ and the existing two managers (DFA and IOOF).
The scheme would gradually transition the global shares holdings over the next few months with underlying ANZ managers Northern Trust and Franklin Templeton taking a respective 80 per cent and 20 per cent of the load, Dixon said.
ANZ handed Northern Trust about $5 billion across international equities and fixed income factor-based mandates last year to replace index manager Vanguard, which is exiting its Australasian institutional business.
Paul Huxford, ANZ Investments chief investment officer, said the NZBritannia win reflected a renaissance in the $33 billion plus manager’s wholesale business.
Huxford said the ANZ wholesale book had surged to $4 billion after sinking below $3 billion recently.
“We’ve had a stable team for some time, returns have been good and we’ve got products and managers that wholesale investors are now demanding,” he said.
But as well as the investment manager shake-up, NZBritannia had also simplified fee structures, Dixon said, switching to a simple all-in charge of about 1.5 per cent (varying across risk-weighted portfolios and schemes) and ditching a “levy” that recharged certain costs to members.
“Now we pick up those levy costs and members have a single, easy-to-understand fee,” he said.
The release says the firm continues to eschew performance fees as “NZBritannia believes such fee structures do not encourage underlying investment managers to act in the interests of scheme members”.
According to Dixon, NZBritannia investments will also have a stronger focus on environmental, social and governance (ESG) factors. For instance, the group will move its global fixed income allocation to a new DFA socially responsible product from the current standard strategy managed by the same firm.
Established about 25 years ago, NZBritannia built up a complicated product set over time that matched alterations to the Qualifying Recognised Overseas Pension Scheme (QROPS) regime.
Most significantly, the UK government, which authorises offshore QROPS providers such as NZBritannia to accept pension transfers, tightened the rules in 2012 in a move that squeezed many operators out of the game. In 2016 NZBritannia created a new managed investment scheme – the Britannia Retirement Trust (BRT) – to accept pension transfers and other retail money while earlier closing its two existing superannuation products to new members.
Most of the group’s money still resides in the older super funds but the BRT continues to grow with current assets under management above $60 million.
Dixon said while the UK pension transfer market has shrunk considerably since its pre-2012 heydays – with a peak estimated annual inflow of over $1 billion into NZ alone – the business remains steady.
“We’re seeing flows of about $30 million every year,” he said.
Ultimately, all the NZBritannia funds pool in the Integral Master Trust (which is also open to non-super clients). NZBritannia bought the Integral Master Trust from IOOF last year as the ASX-listed financial services giant exited the market here.
In addition to the pension transfer and investment business, NZBritannia also operates a financial planning business, Britannia Financial Planning, headed by Wayne Becker, former head of distribution for ING NZ (the precursor business of what is now ANZ Investments).
NZBritannia was looking to ramp up the financial planning business, which has seven Auckland-based financial advisers, Dixon said, with potential acquisitions.
“We need to have the infrastructure in place to quickly integrate financial planning businesses,” he said. “The aim would be to have [any acquired advice firm] fully-compliant [with NZBritannia systems] in three months rather than three years.”
The NZBritannia schemes use Appello for registry, MMC for funds administration and Guardian Trust as supervisor.
NZBritannia remains the biggest NZ QROPS scheme in a tightly contested market that also includes Booster, Craigs Investment Partners, i-Select, Kiwi Wealth, Medical Assurance Society, AMP (via the NZ Retirement Trust), NZ Funds and SuperLife.