BNZ will shift almost $1.2 billion in total from incumbent global asset multi-managers – Russell Investments and JANA – to Vanguard following the fee-changing revamp of its KiwiSaver and retail YouWealth schemes this month.
The move to index-settings for offshore assets coincides with a restructure of the BNZ scheme under direct mandates with BNP Paribas to be appointed as custodian.
Peter Forster, BNZ wealth general manager, said Vanguard would be first to the mandate structure followed by managers of local assets – Mint and Nikko for equities, AMP Capital and Harbour for fixed income and Nikko again for cash – over the next few months.
Forster said BNZ would transition the $620 million of global fixed income currently managed by Russell and the $560 million international equities portfolio in a JANA pool to Vanguard by June. Russell managed virtually all of the BNZ KiwiSaver assets when the scheme launched in 2013 but has now seen that exposure whittled down to zero.
JANA, part-owned by Australian parent National Australia Bank (NAB), remained as consultant to the BNZ investment assets, he said.
Aside from the custodian appointment (replacing Guardian), all other BNZ investment service providers including supervisor (Guardian), registry (Trustees Executors) and fund accounting (MMC) have been retained.
All told, BNZ has about $5.7 billion under management across its KiwiSaver, YouWealth (the recently-launched retail range) and private bank investments. The fast-growing BNZ KiwiSaver scheme holds close to $2.2 billion while YouWealth reports almost $36 million at the last count.
While the Vanguard changes apply to the KiwiSaver and YouWealth products, it is understood BNZ was in the throes of reallocating a substantial portfolio of local shares currently managed by NAB-owned broking house, JBWere, to external managers.
“We are constantly looking at what we offer our customers,” Forster said.
Meanwhile, BNZ has slashed and simplified fees across the KiwiSaver scheme following the restructure. As well as dropping the fixed annual monthly member fee (of $1.95) from May 1, the BNZ KiwiSaver annual management fees have almost halved for the growth option.
Under the new BNZ fee regime, the KiwiSaver moderate, balanced and growth options all fall to 0.58 per cent from 0.9 per cent, 1 per cent and 1.1 per cent respectively. BNZ also knocked of 8 basis points off the conservative fund fee (now 0.5 per cent) while holding the cash and first home buyer products steady at a respective 0.3 per cent and 0.5 per cent.
Forster said the fee fall and flattening followed extensive member research that identified high and differential charges as a barrier to appropriate investment choice.
“We found that for the average consumer the combination of fixed monthly fees and different fund fees was very frustrating,” he said. The now-flat fee structure should make it easier for members to invest in more growth-oriented funds, if that matched their risk profiles, he said.
Despite shifting to a passive stance for global assets, Forster said active managers still added value in the relatively illiquid NZ markets.
“We’re also still actively-managing our asset allocation,” he said.
Forster joined BNZ last year from Australian parent NAB where he was general manager wealth customer engagement.
Many KiwiSaver schemes have opted for the passive approach in at least one asset class in an effort to manage fees or out of a benchmark belief. Vanguard has emerged as the most popular index provider in KiwiSaver-land, winning deals with most bank schemes as well as providers like Booster and Simplicity.
Institutional index fund fees for the most liquid asset classes are usually struck at rock-bottom prices – understood to be as low as 2 basis points for some KiwiSaver schemes.