The NZ superannuation master trust market popped above the $8 billion mark during the December quarter as solid flows, strong investment returns and a significant employer entrant boosted growth, the latest EriksensGlobal survey of the sector shows.
Over the three months to the end of last year total master trust funds under management (FUM) spiked to over $8.2 billion, up $666 million on the September 30 figure.
As reported here last year, the BNZ Officers Provident Association (BNZOPA) stand-alone employer scheme recently shifted member assets to the Mercer master trust, resulting in the “transfer of circa $250 million”, according to EriksensGlobal.
The win saw the Mercer product grow by more than 50 per cent to close out the quarter with over $780 million, leapfrogging Fisher Funds to secure the fourth-largest ranking in the small field of six providers.
But aside from the Mercer fillip, the NZ master trust sector remained largely static, competitively speaking, headed by the almost $3.6 billion AMP NZ Retirement Trust (NZRT).
NZRT, along with other AMP NZ wealth management funds (including the KiwiSaver scheme), is in the throes of switching to a passive investment strategy managed by BlackRock.
The change, expected by April this year, will leave about 80 per cent of the NZ master trust assets captured in the EriksensGlobal survey managed in index funds. Both the $1.7 billion ASB and $1.3 billion SuperLife schemes mostly follow the low-cost passive path. Mercer, Fisher and the tiny (almost $190 million) Aon scheme continue to lean toward active investment approaches.
AMP should substantially reduce NZRT fees – that mostly sit in the 1-2 per cent range – after the BlackRock transition. By comparison, the ASB master trust fees hover around 0.4 per cent (except for the cash fund at 0.23 per cent); SuperLife has a slightly higher sticker price closer to 0.5 per cent for its similar diversified funds – although the NZX-owned scheme also offers a wider mix of sector and actively managed options.
About half of all assets in the EriksensGlobal master trust universe reside in the balanced fund options followed by growth ($1.6 billion) and conservative ($1.2 billion): meanwhile, the risk extremes of defensive and aggressive remain less popular with respective FUM of almost $640 million and $615 million.
“All fund categories saw a positive average return over the one-year period,” the survey says. “The one-year weighted average return for all Growth funds was 6.4%; Balanced funds gained 6.3%; and Conservative funds saw a return of 3.9%.”
The Auckland-based consultancy firm EriksensGlobal is headed by Jonathan Eriksen.