The New Zealand Superannuation Fund (NZS) has begun winnowing through local equities managers up for the approximately $260 million mandate vacated by AMP Capital last year.
An NZS spokesperson said the sovereign wealth fund is “working through our shortlist” with the beauty parade understood to have begun last week.
The active NZ equities mandate – one of three local shares portfolios outsourced by the NZS – was put out to market after AMP Capital was dumped from the role in November 2014.
However, the NZS previously said it might keep the mandate in-house if a suitable replacement could not be found.
Candidates must first pass the NZS ‘operational due diligence’ tests – that cover regulatory, operational, organisational and financial processes – before being considered as an external manager.
As well, the NZS evaluates managers under ongoing ‘conviction’ criteria that include performance, overall conduct, and ESG (environmental, social and governance) factors.
In April, the NZS used its conviction rules to suspend a $281 million NZ shares mandate run by Milford Asset Management pending the outcome of a regulatory investigation into alleged market manipulation charges.
According to the NZS spokesperson, the decision to put the Milford mandate on hold aligns with the fund’s desire “to have the flexibility to dial our investment mandates up and down”.
“The situation with Milford is unusual,” the spokesperson said. “We want to ensure any decisions we make about our manager relationships are based on good, accurate information. Given that the Financial Market Authority (FMA) investigation has not been concluded, and that the facts of the matter are not clear, a suspension as opposed to a termination was appropriate.”
Milford will not be paid any fees while the suspension remains in place. In the interim, NZS in-house local equities team is managing the Milford money along with the former AMP mandate and its existing $300 million portfolio.
The FMA said on April 2 it would complete the Milford investigation within the “next few weeks”.
