Amova NZ has dropped Royal London Asset Management (RLAM) from a circa $200 million spot on its global equities fund panel in favour of a breakaway boutique spun out of the firm last year.
Under the change revealed last week, Life Cycle Investment Partners (LCIP) replaced RLAM on the $600 million Amova (ex Nikko) Global Equity Multi-Manager strategy in a mandate occupying 30 per cent of the total.
LCIP formed in May last after the RLAM global equities team headed by Peter Rutter quit to end an almost eight-year run at the UK investment house.
But from launch until the end of June this year, the manager has grown to about A$14.5 billion as many former RLAM institutional clients, like Amova, followed Rutter et al to the new location.
Alan Clarke, Amova head of diversified funds and external managers, said the NZ business took some time to consider the shift with a couple of factors swinging the decision.
“We were cautious,” Clarke said. “However, the ownership structure where the Australian multi-affiliate, Pinnacle, has a stake in Life Cycle and the rapid growth of assets under management gave us confidence.”
The ASX-listed Pinnacle has a 25 per cent share of LCIP with the multi-affiliate providing product and marketing support to the manager. RLAM previously had strong support in the Australian market including a A$3 billion mandate with third-party fund distributor, Ironbark Asset Management, that was terminated last year.
In a note to investors, Clarke said the Amova “strategy will invest into the Life Cycle Concentrated Global Share Fund via an Australian Unit Trust (AUT) issued by Pinnacle Fund Services Limited. AUTs are collective investment vehicles very well regulated and supervised by ASIC”.
“There is a tax-slippage for tax-paying investors of around 0.08-0.09% p.a. from using a collective investment vehicle based offshore, but we believe having access to best of breed managers is the more important consideration.”
Aside from LCIP, the Amova multi-manager fund has a target weight of 30 per cent to a JPMorgan ‘select’ global shares strategy while splitting the remaining 40 per cent of the portfolio equally between its in-house Edinburgh-based international equities team and the Californian firm, WCM.
Amova appointed JPMorgan last year in the wake of the RLAM global equities shake-up.
“The number of holdings in the strategy will remain around 160 as we have replaced one concentrated, high-conviction strategy of around 40 names with a very similar one,” Clarke said in the client note. RLAM first joined the-then Nikko international shares line-up in 2018.
While RLAM had continued to run a similar strategy after the Rutter group exit, he said the LCIP process – based on creating a concentrated portfolio of stocks from companies divided into five corporate ‘lifecycle’ buckets – had longevity in its favour.
“The Life Cycle investment process is the same one the team have used for over 25 years at RLAM and previous firms,” Clarke said.
Amova has completed the shift to LCIP using a transition manager.
According to figures from Melville Jessup Weaver, the Amova (née Nikko) multi-manager strategy is the best-performing global shares fund in its ‘core’ cohort over the three- to 10-year periods.