BNZ has appointed State Street Global Advisors (SSGA) to replace Vanguard as its core international assets index manager among a raft of other mandate changes in the bank’s investment line-up.
In disclosure documents filed last week, BNZ named SSGA to take over passive management duties from Vanguard in global equities and fixed income covering its KiwiSaver and most other retail schemes. Last October Vanguard announced it would exit all institutional mandates in Australia and NZ ahead of a planned retail super fund launch across the Tasman.
ANZ Investments moved its roughly $5 billion Vanguard exposures to Northern Trust soon after. Another Australian-owned bank, ASB, has a significant passive Australasian equities mandate with Vanguard that has yet to be replaced.
But while the BNZ call to swap out Vanguard was expected, the bank investment arm – recently reappointed as a KiwiSaver default scheme – has made several other surprise underlying manager changes.
Both Columbia Threadneedle (the US-headquartered trans-Atlantic asset management giant formed in a 2015 merger) and the Australian First Sentier Investors have won respective mandates for global fixed income and Australasian equities
The Columbia Threadneedle and SSGA international fixed income blend applies to all BNZ fund products including KiwiSaver, the YouWealth suite and the Private Wealth Series (replacing incumbent Russell Investments).
Meanwhile, a First Sentier Realindex strategy will replace Nikko Asset Management NZ in the BNZ Australasian equities panel. Realindex, part of First Sentier (previously known as Colonial First State Global Investors) follows a factor-based approach.
BNZ appointed Nikko and Mint Asset Management to active Australasian equities mandates in 2019. Mint retains its spot on the BNZ roster along with Castle Point, which won a coveted mandate last October.
The National Australia Bank (NAB) owned institution switched to a mainly passive investment style in its KiwiSaver and retail fund range in 2019, replacing Russell Investments and JANA with Vanguard for offshore portfolios. Russell, which ran most of the BNZ KiwiSaver assets when the scheme first launched in 2013, has now lost its last mandate with the bank after exiting the Private Wealth pool.
However, Nikko remains as cash manager for the BNZ funds while Harbour and AMP Capital NZ keep their local fixed income mandates. MLC Investments, a NAB subsidiary, also stays on as global shares manager for the BNZ Private Wealth range.
BNZ says the underlying manager transition should be completed by the beginning of this September with the bank making a key administrative change prior to the handover.
According to the BNZ KiwiSaver product disclosure statement, MMC will assume retail registry duties after July 1, replacing incumbent Trustees Executors.
“We have entered into a transition agreement with MMC Limited (MMC) in respect of unit registry services for the Scheme and expect MMC to replace TEL as Registrar of the Scheme,” the document says. “This change is expected to take effect no earlier than 1 July 2021.”
MMC already provides fund accounting and other investment administration services to BNZ.
BNZ has over $5 billion in funds under management including more than $3.5 billion in the KiwiSaver scheme.
After winning reappointment as a KiwiSaver default manager last week, Peter Forster, BNZ general manager wealth, said the bank would implement “significant improvements for our members”.
BNZ dropped its default fund fees from the previous 0.5 per cent to 0.35 per cent for the new version (to switch from conservative to balanced asset allocation), due to take effect on December 1 this year.
“While these improvements are only required for the new default balanced fund, we think the changes deliver significant member benefits so we will be implementing them across all of our fund options,” Forster said in a statement. “This includes the exclusion of any investments in companies involved in fossil fuel production – a change we’ll also be making for our YouWealth and Private Wealth Series funds.”
The BNZ scheme upgrade also comes with a number of technical adjustments including new global asset benchmarks and the introduction of buy-sell spreads.
“Buy and sell spreads improve fairness between transacting and non-transacting members,” BNZ says in a note to KiwiSaver members. “Think of it this way – when someone else is transacting in our funds (i.e. contributing, or making a withdrawal), you don’t want to be paying their costs. Likewise, they don’t want to be paying for yours when you’re doing the transacting.”