The Aon KiwiSaver scheme has dropped Milford Asset Management from its default option and as the ‘alternative’ manager in another ANZ-managed fund.
According to the latest Aon KiwiSaver prospectus, the scheme’s default option – which picks up all members who have joined the scheme but not made an investment choice – will now feed 100 per cent into the Russell Lifepoints Balanced Fund. Prior to June 2 this year, the Aon default option was a 50/50 mix of the Russell Lifepoints Conservative Fund and Milford’s Active Growth Wholesale Fund.
As well, the 10 per cent ‘alternatives’ asset allocation in the Aon KiwiSaver ANZ Balanced Fund has changed from the Milford Active Growth Fund to Nikko Asset Management Wholesale Multi-Strategy Fund.
Both changes only apply to new contributions from June 2 this year.
According to Aon investment consultant, Guy Fisher, the Milford alterations reflected a plan to simplify the default option and better match the profile of underlying members.
“We’ve found that members in the default option tend to stay a long time,” Fisher said. “Initially, the thought was that default members would shift on quickly to another investment option but that hasn’t happened.”
He said switching the default option to a single balanced fund was a good compromise.
Aon dropped Milford from the ANZ Balanced Fund to access further diversification offered by “a genuine alternatives fund”, Fisher said.
“Milford has been in the mix for a while and have done well but [the Nikko fund] provides broader diversification,” he said.
However, the stand-alone Milford fund will still be accessible via the Aon KiwiSaver platform. According to the 2014 Aon KiwiSaver financial report, the Milford fund was the largest in the scheme with almost $75 million as at March 31 last year, followed by the Russell Conservative fund with just over $59 million under management.
Meanwhile, Milford has amended its own KiwiSaver scheme prospectus to take account of the ongoing Financial Markets Authority (FMA) investigation into alleged market manipulation charges.
“The FMA is investigating concerns relating to an employee of Milford Asset Management regarding trades carried out last year on behalf of Milford funds,” the prospectus says. “Milford Asset Management and the trader concerned are co-operating with the FMA. The FMA has stated that their investigation does not raise concern about the security or safety of client funds or assets. Milford Asset Management looks forward to the conclusion of the investigation.”
Anthony Quirk, Milford managing director, said the group decided it “was appropriate to publish something [in the prospectus]”.
An FMA spokesperson said disclosure rules require financial product issuers, including KiwiSaver providers, to update offer documents with “any new material information to ensure that they are not misleading”.
“Milford approached FMA to discuss the updates to their prospectus and to check whether the changes were appropriate,” the spokesperson said. “We were comfortable with their approach.”
The FMA said more than two months ago it would conclude the “final [Milford] investigation steps in the next few weeks”.