The $1.8 billion National Provident Fund (NPF) has dumped its small allocation to alternative assets, cutting quantitative manager AQR from the portfolio in January.
AQR has disappeared, too, from the menu of the related Government Superannuation Fund (GSF), which is also managed by the Wellington-based Annuitas.
According to the just-published NPF annual report, the board – chaired by Ed Schuck – dropped the 5 per cent allocation to alternatives following a review last December with AQR “terminated” this January.
PGIM, the US$1.3 trillion investment arm of American insurance giant Prudential Financial, picked up a global fixed income mandate with the NPF in the wake of the change with the fund also adding to its equities exposure.
“The asset allocation was further reviewed in May 2022 and no changes were made,” the report says, in a year where the NPF also engaged dynamic asset allocation strategies for the first time in line with governing documents.
Investment returns across the now eight NPF schemes remained flat for the 12 months ending March 31, ranging from -1.2 per cent to 2.3 per cent. The various NPF schemes feed into the Global Asset Trust for investment purposes.
Restructured in the 1990s to manage the assets of certain closed government-related workplace pension funds, the NPF has seen scheme numbers halve since, including the wind-up of the Pension Cash Accumulation option last year.
The NPF serves just under 9,000 pensioners as well as “3,132 active contributors and 2,564 non-active contributors”, Schuck says in the 2022 chair report.
“Over the coming years, it is anticipated that contributor numbers will continue to fall as members reach retirement age and elect to receive their entitlements as a pension or as a cash lump sum,” he says. “This activity is likely to give rise to further rationalisation of the NPF schemes over time, with members being consolidated into the larger NPF schemes to minimise overall reporting and administration costs.”
The NPF board was also refreshed in 2022 with new members Tracey Berry (now a Mosaic Financial Services Infrastructure partner) and MinterEllisonRuddWatts veteran, Lloyd Kavanagh, replacing Daniel Musset and Stephen Ward who ended their respective terms on June 30.
Professional director, Sarah Park, and well-known investment specialist, Graham Ansell, further spruced up the NPF board, joining earlier in 2022 and late last year, respectively.
While the NPF and the larger GSF (now about $5.2 billion) have different boards, the two funds generally share some investment managers as selected by Annuitas. The NPF currently has 10 underlying managers or about half the GSF contingent.
Annuitas chief, Simon Tyler, is due to step down next month after a 10-year stint at the niche investment house.