The NZX-owned Smartshares has replaced Russell Investments as underlying manager of the $200 million Cook Islands National Superannuation Fund (CINSF).
Under the agreement confirmed last week, CINSF will complete the transition this month from the actively managed Russell multi-manager funds to a passive ‘reference portfolio’ of global equities and bond products offered under the Smartshares sub-brand, SuperLife.
Specifically, CINSF will invest in a mix of hedged and unhedged versions of the SuperLife Total World and Global Aggregate Bond products, which feed into exchange-traded funds offered by Vanguard and iShares, respectively.
But the Cook Islands pension scheme may eventually allocate to more active investments, according to a release.
Following an approach used by the NZ Superannuation Fund, the CINSF reference portfolio will serve as the benchmark for “market exposure against which all future active management endeavours will be measured for their capacity to add value”, the statement says.
David Brown, CINSF chief investment officer, said the Smartshares funds provided a cost-effective, NZ dollar-denominated investment solution for the country’s pension scheme.
The Cook Islands, which has strong historical and cultural ties to NZ, uses the Kiwi dollar as currency.
Brown said the Smartshares “flexibility and willingness to think out of the box to accommodate our specific requirements has been very helpful”.
Hugh Stevens, Smartshares chief, said the CINSF project reinforces the manager’s commitment to the Pacific Islands, coming off the back of recent wins in Tonga and Nauru.
Stevens said the Cook Islands deal also “demonstrates Smartshares’ ability to provide regional investors with tax effective access to global investment opportunities”.
An ex-pat New Zealander, Brown joined the CINSF as its first CIO during the 2020/21 financial year after the scheme established an internal investment division.
Previously, he held senior investment roles with institutions in the UK, Australia and Papua New Guinea, where he headed the A$2 billion government Nasfund until 2019.
CINSF, which uses Aon NZ as consultant, has been investing via Russell in one form or another since inception of the scheme in the early 2000s, most recently using a range of NZ- and Australian-domiciled funds.
Last month Russell also lost the A$280 million Tuvalu Trust Fund mandate after just two years in the role.