Inside Money: Past passive - NZ Super goes in house

Photo / Richard Robinson

The New Zealand Superannuation Fund (NZS) is adding a new in-house funds management team as it prepares to shift its $300 million local share index portfolio to an active basis.

Matt Whineray, NZS head of investments, said the $19 billion fund should have a portfolio manager confirmed within a month with a couple of analysts to follow.

"We already manage about a third of our New Zealand equities in-house [via an index-tracking portfolio] and now we're transitioning that to active management," Whineray said. "We think there's opportunities for active managers in the New Zealand market."

He said for now NZS has not considered widening its internal active management brief to international shares, a move fellow Crown investment entity, the Accident Compensation Corporation fund, initiated last year.

NZS took on the passive management duties after relieving the NZX-owned index manager Smartshares of a $400 million mandate in 2009.

Whineray said the move wouldn't alter the NZS relationship with its three existing active New Zealand share managers, Milford Asset Management, Devon Funds Management and AMP Capital.

"But [The move to in-house active management] does reduce the risk of relying on external managers," he said.

However, several industry insiders have indicated AMP Capital was set to lose its NZ Super equities mandate while Devon and Milford would retain their roles.

If so, AMP would join the growing list of local managers who fired by the Super Fund, which has included Fisher Funds and Brook Asset Management. The financial chair-swapping is also par for the course in the investment industry.

AMP Capital has itself been the beneficiary of a portfolio rethink at its sister company, AMP Financial Services (AMPFS). For example, AMPFS has removed Milford Asset Management from its list of underlying managers recommended by the group's financial advisers, putting AMP Capital in charge of the money (believed to be about $100 million, an amount, strangely enough, close to its NZS mandate).