NZ Funds Management has embarked on an ambitious growth drive targeting the UK pension transfer, adviser-distributed KiwiSaver, term deposit and trust markets with re-engineered and re-priced products.
Michael Lang, who jumped from NZ Funds CIO to CEO last year, said the Auckland-based firm had hit the ground running in 2019 with a “zero transfer fee” UK pension offer.
“Typically, providers charge between 2.5 to 5 per cent at the front-end for UK pension transfers plus high ongoing fees in traditional funds,” Lang said. “We now offer UK pension transfers for free with the funds invested in products that are based on the same service levels and fees as KiwiSaver.”
Since launching the offer earlier this year, the NZ Funds has attracted about $30 million in UK pension transfers with another $40 million in the pipeline, he said.
Total ongoing fees in the NZ Funds super product, which receives the UK pension transfers, range from about 1.2 to 1.8 per cent; slightly above the group’s KiwiSaver fee range of 1.12 to 1.67 per cent.
While NZ Funds has one of the highest KiwiSaver fee structures, Lang said the price includes access to full financial advice. Furthermore, the manager had lowered fees across the board (including a free offer for those under 18) and was considering other pricing models for its KiwiSaver scheme, Lang said.
He said NZ Funds had also targeted broader distribution for its KiwiSaver via the registered financial adviser (RFA) market currently dominated by Generate. According to Lang, NZ Funds had received solid support from over 100 RFAs with a distribution offer that closely matches Generate on pricing while also including access to the group’s new Wealth Plan technology to aid investor KiwiSaver decisions.
“It’s not just about the pricing,” Lang said. “We want KiwiSaver members to make a genuinely good investment decision if they transfer to us.”
NZ Funds has eyes on another market, too, with an innovative term deposit (TD) product directed at retirees in particular. He said the firm had ‘soft launched’ the new TD product – backed by NZ Funds long-time banker, Westpac – that offers investors rates in the order of 5-10 basis points above the market at any given time without taking on any credit risk.
Lang said the product saves retirees the often-onerous task of dealing with anti money-laundering (AML) paperwork each time they seek to roll over TDs into whatever bank has the best rates.
After trialing the TD with a small group of advisers a month ago about $15 million has already been invested, he said. The firm planned to open the TD window to the wider adviser market soon, Lang said.
Finally, NZ Funds had registered a trio of new products housed under one of its two ‘Portfolio Service’ investment schemes.
Lang said the new funds – yet to go live – target the trust market, which is undergoing legal changes. He said ultimately trust investors currently using the NZ Funds Managed Portfolio Service (MPS) would shift across to the new products.
According to the NZ Funds Trust Investment Series product disclosure statement (PDS), the three actively-managed portfolios cover different risk profiles ranging from balanced to high growth.
The funds are “designed for trusts and individuals that have a long-term investment horizon and who do not expect their circumstances to materially change over time”, the PDS says.
Lang said the new products include a tiered fee structure that will also apply to the MPS.
Including estimated performance fees, the three ‘Dynamic Local and International’ funds will incur annual charges of between 2.36 per cent to 2.93 per cent for clients with under $1 million to invest. The fees scale down to between 1.56 per cent and 1.88 per cent for investors holding $3 million and over in the NZ Funds products.
The funds also have a wide and flexible investment brief with the ability to vary asset allocation, invest directly or indirectly “using derivatives and/or any resulting leverage; using collective investment vehicles; using specialist investment managers (including hedge funds); taking foreign currency positions; applying hedging; or taking short positions”, the PDS says.
NZ Funds, which launched about 30 years ago, manages over $1 billion via a number of vehicles including a KiwiSaver scheme and super fund aimed to UK pension transfers.
As at the end of December NZ Funds reported about $700 million under management in its Portfolio Service offerings (structured as discretionary investment management services – or DIMS), close to $220 million in the KiwiSaver scheme and $21 million in the super fund.
NZ Funds manages some local assets in-house but also outsources to a range of global fund managers including: Impala; LSV Asset Management; Suvretta; Universa; and, Emerson Point (founded in October 2017).
