The $1.6 billion Generate has ventured beyond the KiwiSaver market for the first time with release of a unit trust version of its ‘focused growth’ fund.
Henry Tongue, Generate chief, said the launch was prompted by “simple demand” from the group’s current KiwiSaver investors and supporting financial advisers for a non-locked in product.
“Our existing advisers and clients told us they wanted a non-KiwiSaver product,” Tongue said. “We plan to launch a full range [of unit trusts] eventually but the focused growth fund was the most popular choice.”
He said the fund would ultimately be offered via “all distribution channels”.
Generate offers three core risk-weighted funds – conservative, growth and focused growth – that are also mixed into seven lifestages products. Focused growth, the largest of the three portfolios, is the most heavily-weighted to international equities.
The focused growth product has garnered over $660 million since the Generate KiwiSaver scheme launched in 2013, according to the June quarter product update. (Morningstar data shows the fund has hit almost $750 million as at early October.)
While the scheme manages local and fixed income assets in-house, Generate outsources most offshore equities to a panel of underlying managers including: T Rowe Price; Magellan; Berkshire Hathaway; Orbimed Capital; Polar Capital; Platinum; and, Jupiter.
Since inception, the focused growth portfolio has returned almost 9.6 per cent after fees and taxes (at 28 per cent) against 13.34 per cent for the (not adjusted for tax) benchmark, the fund update shows.
However, the Generate fund is top of the Morningstar ‘aggressive multi-sector’ category over both the one- and five-year periods ending August 31.
The KiwiSaver version of the focused growth fund has all-in costs of 1.64 per cent (plus a $30 member fee) while the new unit trust is slightly more expensive (1.77 per cent) but without the fixed annual member fee.
Tongue said Generate has dropped its KiwiSaver fees by 12 per cent over the last year and planned further reductions as scale increases. Generate was the second-fastest growing scheme (behind Simplicity) over the 12 months to March 31, the latest Investment News NZ annual KiwiSaver report found, as well as recording the highest net gains in transfers from other providers.
In total, Generate now boasts about $1.6 billion under management on behalf of more than 74,000 KiwiSaver members. Tongue said Generate had provided advice to almost all members, which has seen both exposure to growth assets and the proportion receiving the full annual member tax credit rise well above industry averages.
The manager has also been hiring up recently, securing Salt Funds Management senior analyst, Andrew Bolland, as a portfolio manager in June. Bolland was one of Salt’s original crew, coming across from BT Funds Management where the boutique’s core investment team shipped out of in 2013.
Generate further appointed Peter Grayson as chief operating officer. Grayson, previously Northern Trust global brokerage chief operating officer in the UK, has been consulting at Generate since April.
He was also operations manager at Polar Capital for over six years starting in 2001.