Global passive investment giant, Vanguard, has registered 30 more funds in NZ under the trans-Tasman Mutual Recognition (TTMR) regime, bringing almost its entire Australian-domiciled wholesale product range across the ditch.
In a document dump last week, the 30 Vanguard funds join the existing seven products available in NZ under TTMR, which includes three NZ dollar-hedged strategies used by several KiwiSaver schemes as well as retail investors.
Vanguard Australia offers 40 wholesale funds covering most asset classes with even a smattering of actively managed products among the mainly index-tracking strategies.
Previously, the manager had registered six equity funds (mostly tracking broad global indices plus an Australia shares option) and an international fixed income strategy through the TTMR process: Vanguard built NZ dollar-hedged versions of its global ‘ethically conscious’ bond and share index funds and another screened international equities product on request of local wholesale investors including Simplicity and Booster.
The TTMR rules enable managers to sell products in either jurisdiction using the same offer documents along with a warning message highlighting some of the tax, regulatory and disclosure differences.
About 1,000 of the 1,246 registered managed fund in NZ are Australian-domiciled products offered under TTMR.
Late in 2020, Vanguard shocked large-scale investors in Australia and NZ after announcing its exit from the institutional mandate business in the region. A swag of NZ institutions, such as ANZ and BNZ, subsequently re-homed at least $10 billion in total in the wake of the Vanguard move.
In Australia Vanguard is about to launch a new low-cost superannuation scheme on the back of a growing direct-to-consumer and adviser distribution platform.
Larger investors in Australia and NZ can still gain access to Vanguard strategies via the pooled wholesale funds while the passive products are also popular for retail clients on direct-to-consumer platforms such as InvestNow.
However, Vanguard has yet to establish a portfolio investment entity (PIE) range of funds for NZ investors, which may trigger some wholesale clients, including Simplicity, to search for other solutions as they gain scale.
Investors in NZ can access offshore-listed Vanguard exchange-traded funds (ETFs) through platforms like Sharesies or Hatch. The NZX-owned Smartshares also uses Vanguard as underlying manager on several ETFs.
Aside from its wholesale reach and retail brand recognition, Vanguard does not have a dedicated distribution infrastructure in NZ but the TTMR product roll-out might signal a renewed effort here.
However, a Vanguard spokesperson said the NZ “fund registration relates to an improvement in an administrative process for us rather than any distribution objective”.
According to Vanguard offer documents, the manager uses Link “to manage the registry and transfer agency functions on behalf of Vanguard for institutional investors and New Zealand investors (Institutional Investor Accounts and New Zealand Investor Accounts, respectively)”.
Vanguard uses FNZ for retail registry in Australia.
As well as Smartshares, the NZ passive-style investment market is growing with local start-up, Kernel Wealth, gaining traction while the Australian ETF provider, BetaShares, is primed to launch a PIE suite after earning a Financial Markets Authority licence last month.
The US$8 trillion plus Vanguard is the second-largest fund manager in the world behind BlackRock, which holds huge sway in the NZ institutional market in particular.
Daniel Shrimski replaced Frank Kolimago as head of Vanguard Australia last September.