The Medical Assurance Society (MAS) has upped its exposure to alternative assets as traditional bonds and equities lose their allure, according to the group’s head of investment products, Daniel Callaghan.
Callaghan said MAS, which runs close to $1 billion in its superannuation and KiwiSaver schemes, has been allocating more to alternative assets as “other markets become less and less attractive”.
“While there already was an argument to allocate more to alternatives in our higher growth funds, we’ve been putting more in alternative assets across all our funds,” he said.
The MAS restricted traditional super and KiwiSaver schemes reported funds under management of about $500 million and $400 million respectively as at March 31 last year. According to the September 2015 MAS investment statements, allocation to alternative assets ranged from 2.5 per cent in the group’s defensive fund to 15 per cent in the global equities portfolio.
MAS offers seven investment options up the risk scale from a pure cash fund to the global equities fund with most manager selections outsourced to JB Were NZ
Callaghan said MAS could invest up to 20 per cent in alternatives for its growth options.
He said the MAS board reviews and approves underlying manager selections in advance, giving JB Were the freedom to chop and change investments as required.
“We don’t want to be making the decision each and every time JB Were wants to change a manager,” Callaghan said.
MAS has been one of the quiet achievers in the KiwiSaver space racking up almost $390 million and close to 13,800 members as at March 31, 2015, while its sister employer super fund closed in on $500 million under management.
The MAS KiwiSaver fund opted to be a restricted scheme in 2012 following regulatory changes requiring all public offer schemes to use an independent corporate trustee. Meanwhile, the longer-running MAS employer super scheme remains one of the few NZ funds eligible to accept UK pension transfers under the Qualifying Recognised Overseas Pension Schemes (QROPS) regime.
MAS has traditionally attracted members from the NZ health professions and their families, its website says.
“Over time, it has been our privilege to extend our services to a wider range of professionals. Today, more than 28,000 Members trust us with their business,” the MAS site says.
While MAS has avoided some of the Financial Markets Conduct Act (FMC) compliance burden by remaining a restricted scheme, Callaghan said transitioning to the new regime was currently absorbing organisation resources.
As part of the transition process, MAS will discontinue its portfolio investment entity (PIE) cash fund, debenture and unsecured note savings plans as at April 1 this year.
At the same time, MAS has ditched its home loan referral relationship with ANZ in favour of Westpac, which will also act as the group’s partner in providing short-term fixed income products.
“We’ve selected Westpac as our lending partner on its ability to meet our Members’ needs. Westpac will have a dedicated team looking after MAS business, and we’ll work with them to ensure our Members can access lending products and services for home and personal lending, equipment and vehicle finance, and business/practice lending at preferential rates,” the MAS website says. “For complex arrangements, your MAS adviser will work closely with you and Westpac… MAS Group receives revenue in the form of a commission from Westpac.
MAS signed a home loan referral deal with ANZ in 2009 after changes to the non bank deposit taking rules made its own mortgage products uncompetitive.