Brook, AMP to manage NZ super

The New Zealand Superannuation Fund has selected AMP Henderson Global Investors (New Zealand) and Brook Asset Management to manage two of its four New Zealand listed equity portfolios.

Chief executive Paul Costello announced yesterday that AMP Henderson would manage a portfolio benchmarked against the NZSX50 index but with moderate deviation from it.

The portfolio was expected to grow to around $100 million over the next year.

Brook Asset Management's portfolio would be of a similar size but would be assessed against a tailored benchmark designed to provide the flexibility to construct an actively managed portfolio with less focus on the NZSX50.

Costello said two more New Zealand equity managers would be chosen before the end of the year to manage the remainder of the allocation to listed New Zealand equities.

Both would manage portfolios to benchmarks with even less similarity to the composition of the NZSX50, giving them more scope to invest in small and medium-sized companies.

As a result the fund expects to have about $300 million invested in the local equity market by June 2004, rising to $7.6 billion within 20 years.

Costello said AMP Henderson and Brook were chosen after an extensive selection process including interviews with all New Zealand managers whose investment approach was consistent with the two mandates.

The performances of the two fund managers would be reviewed regularly and they would be expected to outperform the market after fees over reasonable periods of time.

Managers are hired under agreements which provide for their immediate termination if the guardians of New Zealand Superannuation decide.

The NZ Superannuation Fund's overall performance target is to exceed the risk-free rate of return (commonly regarded as the interest rate on cash) by 2.5 per cent annually over rolling 20-year periods.

Costello said it was unlikely that this would be achieved in the first year given the large proportion of the assets which will be held in cash during the year as the investment portfolio is built.

The appointments of investment managers for the New Zealand fixed interest sector, as well as the first international equities manager, are expected to be confirmed later this month.