The approximately $250 million local government superannuation and KiwiSaver schemes operator has fired long-time underlying fund manager, ASB, after its latest review.
Following the manager change, in addition to its existing international and NZ share duties, surviving incumbent AMP Capital has assumed responsibility for ASB’s property and global bond portfolios for the two ‘Supereasy’ schemes while the newly-appointed ANZ Investments now manages local fixed income and cash for the local government funds.
According to the 2016 Supereasy annual reports, ASB (via its super master trust) managed almost $130 million across the local government organisation’s KiwiSaver and traditional superannuation schemes.
The fund revamp coincided with a raft of changes for the Supereasy management and administration company that included a new name and CEO. Previously, known as the Local Government Insurance Corporation (trading as Civic Assurance) the entity now goes by the Civic Financial Services moniker – a name change made necessary after the group handed in its insurance licence.
At the same time, the group’s CEO, Tim Sole, has abdicated in favour of Ian Brown, veteran superannuation manager at Civic.
Brown said Sole would maintain a part-time role at Civic with a particular focus on the $20 million Local Authority Protection Programme Disaster Fund (LAPP). LAPP, which provides cover for damage to local body infrastructure assets, has had a busy few years following the 2011 Christchurch earthquake (where it paid out some $250 million in claims) with the Kaikoura quake last year also seeing the fund contributing to council rebuild costs there.
“Tim will still be around,” he said.
Brown said the Civic restructure was unrelated to the Supereasy fund manager changes.
“We don’t change fund managers without careful consideration,” he said. “We just felt that under the Financial Markets Conduct Act (FMC) regime, the new line-up made better sense in the long-term for both the scheme and members.”
Supereasy has consistently been the cheapest scheme in the ongoing Investment News NZ annual review of the KiwiSaver market, recording an all-in cost of just 50 basis points in the 2016 analysis.
Aside from a 10 per cent allocation of its offshore share budget to the AMP Capital Responsible Leaders global equity fund, Supereasy invests in growth assets on a passive basis.
Sole said the simple structure of the Supereasy scheme and focus on efficiency has kept costs low despite the increased expenses associated with FMC compliance.
The traditional Supereasy super fund (officially, the Local Government Superannuation Scheme) was the first employer scheme to transition to FMC while its sister KiwiSaver fund was the first restricted scheme readied for the new regime.
According to a recent Supereasy newsletter, the FMC regime has enabled further transparency of underlying manager fees, which will now be reported to members.
The newsletter says Supereasy currently reports total annual costs of 0.5 per cent, which including manager fees, but with other fund costs buried in the unit price
“We have now been provided with an estimate of these costs by our fund managers, so are able to include these amounts when disclosing our fee structure,” the newsletter says. “These in-fund costs vary between 0.03% and 0.06% per annum between the various funds the schemes invest in… we will show the total fund charges as ranging from 0.53% to 0.56% per annum.”