Morningstar has placed the AMP KiwiSaver funds ‘under review’ following the exit of AMP Capital’s multi-asset chief, Peter Verhaart, just over a week ago.
In a report issued last Thursday, Morningstar says the move introduces some uncertainty about the direction of the AMP KiwiSaver fund investments, which are managed by AMP Capital.
“Verhaart has been the key investment decision-maker behind the AMP KiwiSaver scheme for a number of years so his departure carries great significance,” the Morningstar report says. “We are placing the scheme Under Review until we have greater understanding for how the funds will be managed.”
Kathryn Young, Morningstar Australia fund analyst, said ‘under review’ was not a sell signal for investors or advisers.
Young said the research house would spend a few weeks digging into the implications of the post-Verhaart AMP Capital NZ restructure.
“With [Verhaart’s] departure the group has signalled a greater alignment with the Australian arm of AMP Capital,” she said. “That suggests there will be changes to the portfolio that we would like to understand in greater detail.”
While AMP Capital NZ already worked closely with its Australian parent on investment strategies, Young said the respective underlying portfolios were not identical.
“Of course, AMP Capital NZ always managed New Zealand assets but there were other differences [from the Australian portfolio], for example, in the allocation to alternative assets,” she said. “The portfolios are not wildly different, but they’re different enough for us to question the affect of a closer alignment with Australia.”
AMP Capital NZ head of investment strategy, Keith Poore, and chief economist, Bevan Graham, “ably supported” Verhaart in managing the portfolios, the Morningstar note says.
“The duo will continue in their current roles but their investment making responsibilities will be expanded and they will be integrated further with AMP Capital’s Australian multi asset group,” the research house report says. “This is a logical move, however, there is little clarity, at the time of writing, about what effect Verhaart’s departure will have on the structure of the funds.”
Morningstar would further question both AMP Capital NZ and AMP Financial Services NZ (the distribution arm headed by Jack Regan) about how the new investment structure would affect the KiwiSaver schemes, the report says.
Prior to Verhaart’s departure, Morningstar rated the AMP KiwiSaver scheme overall as ‘silver’ – or second in its five-step scale – with underlying funds ranging from unrated to three-star investments.
Morningstar says following AMP’s merger with Axa in 2013, the KiwiSaver fund returns “have been disappointing”
“Performance has lagged peers considerably, unfortunately, and this has also come with greater volatility,” the report says. “Commodities exposure has been the major headwind as peers steered clear. The commodities strategy had a two-year return of about negative 9% as at May 2015. Investment in emerging markets also detracted, as peers achieved all of their global-equities exposure through stronger-performing developed markets.”