Super fund dumps ING and Smartshares

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The New Zealand Superannuation Fund (NZSF) has sacked ING and the NZX-owned Smartshares from two major mandates leaving AMP Capital as the only external manger of local mainstream assets within the $13 billion fund.

Tuesday, July 21st 2009, 5:42AM

by David Chaplin

The NZ cash and credit portfolios formerly managed by ING, understood to total about $200 million, and approximately $400 million of Smartshares passive NZ equities funds will now be managed in-house by NZSF.

Smartshares will lose almost two-thirds of funds under management following the loss of the NZS mandate. According to the NZX March 2009 quarterly report, Smartshares managed about $665 million at the end of March this year, which included a "further $118 million" invested by NZS during the first quarter of 2009.

However, Geoff Brown, NZX markets development manager, said while the loss of the NZS mandate was "unfortunate" it would not materially affect the group's profit.

"[The NZ Super mandate] was a significant part of Smartshares' funds under management but it was a much less significant part of its revenue," Brown said.

It is understood Smartshares margin on the NZS funds was under 10 basis points while it charges over 70 basis points to retail clients.

ING head of funds management Paul Butler said losing the mandate would "not have a significant effect" on its business, which employs three cash and credit specialists.

According to a source, ING earned between 6-8 basis points on the NZSF cash portfolio.

"NZ Super has spoken previously about bringing management in-house and it has built up a team... it's part of the evolution," Butler said.

In a statement, NZSF said: "The decision to manage the two mandates internally has been made in order to have greater flexibility, utilise the internal management capabilities the Guardians have developed and to reduce costs."

An NZS spokesperson said removing ING and Smartshares would save "hundreds of thousands of dollars" in costs.

He said NZS was committed to managing money internally "where we can add value".

After the latest move only AMP Capital retains an external mandate with NZSF for local mainstream assets, and it manages an active New Zealand equities mandate and a New Zealand property portfolio.

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