NZ fund managers may have to look offshore for further growth as increasing competition from both local and Australia-based providers squeezes opportunities at home, according to head of the NZX-owned Smartshares, Hugh Stevens.
Stevens said the largely passive Smartshares business, which picked up the ResearchIP fund manager of the year award last week, was expanding into several overseas markets in a bid to build scale in the now $8 billion or so investment shop.
“We’ve had a few recent wins in the Pacific islands and we’ve also registered Smartshares and SuperLife funds in Australia,” he said.
In September this year, Smartshares replaced Russell as manager of the $200 million Cook Islands National Superannuation Fund (CINSF) following similar mandates in Tonga and Nauru.
Stevens said the manager also registered some Smartshares funds in Australia under the trans-Tasman Mutual Recognition (TTMR) regime, partly to support the expansion plans of the Sharesies platform in that market. Smartshares passive exchange-traded funds are popular items on the pineapple platform, which is hoping to tap into the large ex-pat Kiwi population in Australia.
Similarly, he said the firm registered SuperLife funds under TTMR to back the Ka Uruora savings scheme it launched for the Taranaki-based iwi in 2019: about a third of the iwi members live in Australia.
And Stevens is off to Japan early next month to talk with regulators and potential distributors of Smartshares funds after the manager secured the first Asia Region Funds Passport earlier this year.
ResearchIP said in a release that Smartshares has “consistently been shortlisted, finalists and winners in several sector category awards, and now the Longevity award and Fund Manager of the Year”.
“When all is said and done, be it country or market cap specific, Smartshares has shown passive investing has a place in portfolios,” the release says.
The Queensland-based researcher has been involved in NZ fund awards since 2016, first as adviser to the-then NZX-owned FundSource event before setting up the industry prizes under its own banner a couple of years ago. Last week’s Auckland show was the first live ResearchIP foray in NZ since the inaugural event in 2019: over the following two COVID-interrupted years the NZ awards were held online.
The ResearchIP fund gong ceremony also threw up other surprise winners, notably with Pathfinder usurping Milford Asset Management as KiwiSaver manager of the year.
Pathfinder held out Milford and the Fisher Two schemes to win the KiwiSaver prize but – in another twist – the ethical investing specialist lost out to Harbour as the responsible investment manager of the year.
As well as several local brand division winners – including Devon and QuayStreet – ResearchIP anointed a few lesser-known Australian managers such as Alceon and Clearbridge RARE as best-in-category. Meanwhile, Perpetual (currently amid a fraught merger process with fellow ASX-listed manager, Pendal) also emerged as a category winner and finalist despite largely disappearing from the NZ market years ago.
Australia-based funds offered in NZ under TTMR represent over 1,150 of the total 1,700 issues in the Disclose database but information on product flows across the Tasman is sparse or non-existent.
Stevens said the growing cohort of Australian managers this side of the Tasman would put competitive pressure on local providers.
The full list of ResearchIP award winners and finalists is available here.