Inside Money: Passive funds increase share of top 500 universe

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A combined New Zealand fund would, by my reckoning, rank at 110 on this just-published list of the world's top 500 investment managers.

If you combine the $60 billion or so of Crown fund assets with the roughly $140-odd billion of household investments outside of bank deposits - - superannuation, managed funds, direct equities and the like (which converts to about US$157 billion at current rates) that would place NZ at 106 on the list compiled by global consultancy firm, Towers Watson.

As it stands, no New Zealand-based funds make the Towers Watson top 500, with the bottom spot filled by the US$6.883 billion Turkish 'Yapi Kredi Asset Management'.

Fisher Funds, with about US$4.5 billion under management would be the closest top 500 contender the country has.

Despite that, a large chunk of NZ-sourced investment funds is represented on Towers Watson list, mainly via the Australian-owned managers that do make the top 500, including: Macquarie (52); Commonwealth Bank (90); National Australia Bank (119); AMP Capital (123); Perpetual (331); Platinum (341), and; Magellan (350).

All of the above are more-or-less household names in New Zealand - perhaps not Platinum and Magellan, two Australian-based fund managers that invest in global equities which have pretty decent support from financial advisers over here.

But as well as the maybe-familiar retail brands, the Towers Watson top 500 includes plenty of names that are also managing money on behalf of New Zealanders in the background. For example, the NZ Super Fund taps into several of the top 500 managers.

All up, the top 500 managers control about US$76.5 trillion, according to Towers Watson, just over 40 per cent of which is managed by the biggest 20 investment firms.

The study also reveals the growing influence of passively-managed funds, which grew by an average 14 per cent per annum over the decade compared to only 6 per cent for the top 500 collectively, the research shows.

Passive funds more than tripled over the 10 years to December 2013 to hit $US14 trillion, or just over 18 per cent of the total pool of money floating around the top 500 world.