N.Z. Superannuation Fund Says Domestic Stock Pickers Do BestTracy Withers
The New Zealand Superannuation Fund, the nation’s largest fund manager, says stock pickers do best in the domestic market and that’s why it will begin actively managing local equities later this year.
“The nature of the New Zealand market is that those who put the effort into active management get rewarded for it,” Tim Mitchell, general manager of corporate strategy, said in a telephone interview. The Auckland-based fund yesterday appointed him manager of New Zealand equities.
New Zealand’s benchmark NZX50 Index has surged 27 percent the past 12 months, more than three times the gain by the Dow Jones Industrial Average and outpacing the 19 percent gain by Australia’s S&P/ASX 200 Index.
New Zealand Superannuation, a government agency building a fund to meet future pension needs, had NZ$20.9 billion ($18 billion) invested globally at Dec. 31. The fund has three external managers who actively manage a portfolio of New Zealand stocks, while it passively manages as much as NZ$350 million of domestic stocks.
“Essentially we’re converting that passive portfolio to an active portfolio to be run internally,” said Mitchell, who will be joined by two dedicated analysts. “One of the things we have to determine is how much we can manage internally under that style. We’re pretty confident we can manage the amount that we’ve got.”
The new fund will co-exist with the current active funds run by external managers, Mitchell said.
“One of the key issues for active managers, particularly in a market like New Zealand, is the capacity that they can manage relative to their style of management,” he said. “We found in the local market, even if you find a good manager, you don’t want to flood them with money because their ability to stock pick is dependent on keeping some constraint on the amount of money they manage.”