Westpac Bank-owned BT Funds Management NZ (BTNZ) has gone underweight global equities for the first time in almost a decade.
According to Matthew Goldsack, BTNZ head of investment solutions, the group adopted a defensive posture last month in response to heightened global risks and stretched valuations
“In April, BTNZ moved its multi-asset funds to an underweight exposure to risk assets – reducing its global equities allocations to an underweight position for what is the first time since the global financial crisis,” Goldsack said.
The portfolio de-risking also saw BTNZ take small underweight positions in both NZ shares and listed property while adding “liquid alternatives” to the mix for diversification purposes, he said.
Despite a solid March quarter overall for the NZ equity market, Goldsack said there was an unusually broad spread of results across managers over the period.
“I’ve never seen quite as wide a divergence before,” he said.
BTNZ invests in local shares via a trio of local managers: Devon, Harbour and Salt.
In fixed income, the $9 billion plus funds business has opted for a slight tilt to domestic assets and lower duration risk in its global bond portfolio. The offshore fixed interest portfolio shifted to underweight sovereign debt and overweight “spread sectors” such as investment grade credit and asset-backed securities.
“We continue to position our funds defensively and believe that caution is required given rich valuations, persistent low global growth, and elevated near-term macro risks – such as Brexit,” Goldsack said.
He said the BTNZ strategy would not be affected by the sudden exit last week of the BT Funds Group (BTFG) chief investment officer, Patrick Farrell, across the ditch.
A nine-year BTFG veteran, Farrell would be replaced by BT Investment Management head of diversified strategies, Martyn Wild, the group since confirmed.
While the trans-Tasman investment teams enjoyed a “very close working relationship and collaboration”, Goldsack said there were no formal reporting lines between the two entities.
However, Farrell was also on the BTNZ board and would need to be replaced “in due course”, he said.