Generate has recently added two new local external managers and opened up its flagship growth fund for consumption on another KiwiSaver scheme for the first time after inking an agreement with InvestNow.
The Auckland-based boutique joined with the NZ Super Fund, the Government Superannuation Fund, Fisher Funds and other investors last week by allocating to the local technology company private equity vehicle, Movac 6, which raised more than $200 million in its latest offering.
But Generate has also emerged as an investor in the Te Ahumairangi Global Equity Fund, representing a notable win for the Nicholas Bagnall-run shop. (As reported last month, the Te Ahumairangi portfolio investment entity fund just topped $100 million, adding to the now $2 billion plus international equities mandate Bagnall secured from his former employer, the Accident Compensation Corporation, in 2020.)
Other external managers in the Generate stable include the Warren Buffet-led Berkshire Hathaway (via a B shares investment), the European Opportunities Trust, the T Rowe Price Global Equities Fund, the Worldwide Healthcare Trust, the iShares MSCI World Quality Dividend ESG exchange-traded fund and a “small residual holding” in the listed Magellan Global Fund, according to chief investment officer, Sam Goldwater.
However, Goldwater – who is portfolio manager of the third-party investments – said Generate has gradually scaled-back allocations to external global share managers since the group launched about 10 years ago. For example, third-party managers account for about 20 per cent the $1.8 billion Focused Growth Fund today compared to about 65 per cent “in our early days”, he said.
“As we have built more internal resource it has allowed us to be less reliant on third party managers,” Goldwater said. “We still find it useful to have some investments in these third-party managers as we glean good insights by being invested with them and we have confidence they will provide good long-term performance for our members.”
The Seattle-based Warwick Simons and Nathan Field round out the trio of Generate portfolio managers, looking after in-house wholesale direct global share funds. Field joined Generate from Kiwi Wealth this year to manage a thematic global shares portfolio, similar in style to the strategy he ran previously.
In total, Generate has an investment team of nine including the portfolio managers and two global equities analysts.
The group manages about $3.8 billion, mostly garnered through its KiwiSaver scheme, which has been distributed by both internal and third-party financial advisers.
In a distribution twist revealed last week, Generate will also now offer its Focused Growth Fund on the multi-player InvestNow KiwiSaver and direct-to-consumer platforms.
Henry Tongue, Generate chief, said the InvestNow move represents a “natural evolution” of its distribution strategy.
“We recognise that not all New Zealanders will want to use a financial adviser – and InvestNow has attracted many of these self-directed, sophisticated investors who are comfortable in creating their own portfolios,” Tongue said in a statement.
With Generate, the $140 million InvestNow KiwiSaver scheme includes eight growth funds from the likes of Milford, Fisher, Harbour and Mint among a complete set of 38 investment choices.
Mike Heath, InvestNow general manager, said the Generate fund falls into the “growth-oriented” category most in demand on the platform.