Annuitas has dropped Wellington Management from its global fixed income roster following an asset allocation review earlier this year.
It is understood Wellington managed $200-300 million for Annuitas, which manages about $6.3 billion in total on behalf of the Government Superannuation Fund (GSF) and the National Provident Fund (NPF).
Paul Bevin, Annuitas head of investments, confirmed the Wellington decision was related to the strategic asset allocation review that bumped up the funds’ exposure to growth assets.
“Our asset allocation has shifted a little more towards equities,” Bevin said.
As reported here, the GSF 2018 annual report notes:“From 1 July 2018 the allocation to global equities will be increased gradually over two years to 70% and the allocation to global bonds reduced to 20%.”
About $400 million would shift out of global fixed income to equities during the transition, the GSF report says.
Wellington has been a long-standing manager in the Annuitas line-up, which now features a slimmed-down global fixed investment trio: Ashmore Investment Management (in emerging markets); the ‘unconstrained’ Brandywine Global; and, core exposure via PIMCO.
Annuitas has also cut an AMP Capital commodities mandate from its investment list.
“But that was a tactical decision,” Bevin said. [The AMP commodities exposure] was only intended to be a temporary investment.”
The Wellington-headquartered Annuitas runs about $4.5 billion in the GSF, which was set up to help defray the pension costs of government employees lucky enough to have signed up to the now-closed-to-new-members scheme.
As at June 30 this year the GSF reported 52,577 members (including 7,743 still contributing) – about a 1,000 fewer than in 2017. The government still has a pension deficit of about $8.2 billion for GSF members, although that was down from $8.7 billion in 2017.
The $1.8 billion NPF includes a group of nine underlying, now-closed, Crown-guaranteed defined benefit schemes covering a range of industry groups such as aircrew and the meat industry.
NPF chair, Ed Schuck, told members in a letter this June that the manager had carried out an extensive asset allocation review across all underlying schemes.
“For some schemes, the Board has decided to increase the allocation to growth assets (shares),” Schuck says in the letter. “Whilst this may slightly increase the volatility of the returns for those schemes, it should also increase the overall level of the returns over the longer term.”