Clarity Funds Management has formed another fund-hosting arrangement as the front-of-house for an Australia-based fixed income strategy.
Under the arrangement registered last week, Clarity – part of the Investment Services Group (ISG) conglomerate – will offer a portfolio investment entity (PIE) version of the Daintree Core Income Fund.
“The Fund will invest into the Daintree Core Income Trust, (Underlying Fund) with a small allocation for cash,” the Clarity disclosure document says. “The manager may invest in more underlying funds after consultation with the Supervisor.”
Guardian Trust is supervisor and custodian for the Daintree PIE with Apex (formerly MMC) as administrator.
A Clarity spokesperson said the new fund would be seeded with some transfers also expected from the Australian unit trust version of the Daintree fund.
Daintree, founded in 2017 by Mark Mitchell and Justin Tyler, has been popular on this side of the Tasman, managing more than $1 billion on behalf of investors in NZ dollar-denominated vehicles including $910 million in the Kiwi version of the flagship Core Income Fund.
By comparison, the Australian dollar sleeve of the same Daintree fund reported just over A$840 million under management as at the end of May.
In 2021 Daintree sought a determination from the Inland Revenue Department confirming the NZ dollar-hedged version of the Core Income Fund was not subject to the ‘fair dividend rate’ regime, granting investors here some tax flexibility.
However, NZ investors and advisers increasingly prefer PIE structures to access in-built tax efficiencies in the locally domiciled products.
Clarity – known as JMIS Investment Management until 2017 – also acts as fund-host for a couple of funds run by marquee US brands Capital Group and MFS.
The Clarity-badged Capital and MFS global equities funds reported about $160 million and $180 million under management.
“We don’t have any further funds under development at the moment,” the Clarity spokesperson said. “That said, we are seeing the strongest level of inbound enquiry in some years from offshore fund managers looking for a local partner to create a PIE version of various existing strategies. Given that backdrop it’s possible we may have further launches in the coming months.”
Other local firms serve as de-facto shop-fronts for offshore managers such as Harbour Asset Management with T Rowe Price but FundRockNZ – previously Implemented Investment Solutions – runs the bulk of fund-hosting arrangements here with more than 20 managers signed up.
But another potential NZ fund-hosting provider is understood to be sounding out the market.
Clarity, which also launched an ‘enhanced cash’ PIE in March, is part of the ISG stable that includes Devon Funds, JMI Wealth, Select Wealth and Tahito. Third-party fund marketing firm, Heathcote Investment Partners, represents Daintree in NZ.