A new financial advisory firm-run KiwiSaver scheme is set to launch with former AMP Capital multi-asset chief investment officer, Sean Henaghan, in charge of portfolio management.
Henaghan, an ex-pat Kiwi stranded back home last year under COVID-19 border restrictions, returns to active duties as chief investment officer for Aurora Capital.
Aurora Capital is the funds management arm of Aurora Financial, a financial adviser provider (FAP) headed by Simon Rolland. Henaghan owns about half of Aurora Capital with the remainder under the control of Rolland or Aurora Financial associates.
The Auckland-headquartered Aurora Financial, which has more than 60 advisers under its licence, has just registered its own KiwiSaver scheme backed by the Implemented Investment Solutions (IIS) compliance machine.
According to the Aurora KiwiSaver statement of investment policies and objectives (SIPO), the scheme will initially offer three portfolios – tagged as conservative, growth and ‘climate change’ funds – as well as the ‘RetirementPlus’ option that mixes the fund options according to an age-based risk-weighting formula. Fees range from 1.25 per cent for the conservative fund to 1.5 per cent for the growth and climate options – including a 0.25 per cent advice fee.
The Aurora conservative and growth funds target returns of inflation (as measured by the consumer price index) plus 2.5 and 4 per cent, respectively, following standard asset allocation procedures. Mint Asset Management has been appointed as underlying manager for the Aurora conservative and growth funds.
While the Aurora Climate Fund also has a CPI plus 4 per cent return target, the strategy – split about 70/30 between global equities and international fixed income – follows an explicit environmental, social and governance (ESG) agenda with a range of exclusions and tilts to companies expected to have a positive impact on the planet. (Although, Aurora applies ESG principles across all portfolios.)
The fund “invests in a combination of active and passive ETFs with a core exposure to highly ESG rated global companies combined with satellite exposures to thematic climate related companies”, the Aurora SIPO says. “The fixed income exposure is a combination of US$ inflation linked bonds and global green bonds.”
Henaghan said the Climate Fund would initially gain exposure by investing through BlackRock exchange-traded funds (ETFs) but the strategy could evolve over time as Aurora builds scale.
“This is just the beginning of the journey,” he said.
Aurora, which starts with zero funds under management, also marks a “return to the coalface” for Henaghan, who previously managed A$120 billion in multi-asset portfolios for AMP Capital from Australia.
He formally resigned from AMP Capital last September at the end of a 15-month ‘sabbatical’ and 15 years with the business.
Henaghan was in NZ visiting family when the COVID-19 crisis closed the exit route to his former base in Australia, triggering a sea-change moment for the high-flyer.
After deciding to remain this side of the Tasman, he first met Rolland last September before launching into business with the financial advisory entrepreneur just three months later.
“It’s amazing to think that in less than 12 months I’ve moved from AMP Capital to a start-up,” Henaghan said. “But it’s great to be working closely with advisers, administrators, custodians and brokers – it makes me realise how far away from the coalface I was at AMP.”
The Aurora KiwiSaver scheme will, of course, be distributed firstly via the group’s network of over 60 advisers operating under the FAP licence.
Henaghan said the arrangement enables Aurora to build KiwiSaver portfolios modeled directly around their clients’ needs.
The Aurora client base tends to be reasonably “homogenous”, he said, with relatively simple portfolio management needs.
While many KiwiSaver providers have distribution arms (ranging from banks to asset managers), the Aurora scheme is the first to emerge entirely out of a purely financial advisory business.
Only founded in 2016, Aurora has quietly built an empire of 60-odd financial advisers, sourced mainly from the life insurance and mortgage sides of the industry. However, the group has also accrued a reasonably large KiwiSaver book with about $95 million in assets under management, according to the Aurora website.
Currently, Aurora lists Generate as a KiwiSaver partner but it is understood the group has worked with others in the past including NZ Funds.
The Wellington-based IIS, which already operates a KiwiSaver scheme under its subsidiary InvestNow brand, acts as fund-host for the Aurora product. IIS has appointed Public Trust as supervisor, MMC for registry and administration, and Adminis as custodian for the Aurora scheme.
Henaghan said the Aurora KiwiSaver would open for friends and family first before opening to the wider market later in July.