Wielding the axe at National Mutual
National Mutual is undertaking a massive product revamp to coincide with it changing its name to AXA on August 8. The changes will impact on a number of funds and affect 2500 investors.
Monday, July 26th 1999, 12:00AM
National Mutual is undertaking a massive product revamp to coincide with it changing its name to AXA on August 8. The changes will impact on a number of funds and affect 2500 investors.
The company has been working for some time on a rationalisation of its investment and risk product ranges, which will essentially see a number of closures and the launch of one new fund.
Part of the impetus for this rationalisation comes from the rebranding of the group. Essential elements of a rebranding exercise include having a focussed product range as well as high levels of advertising.
One of the most recent examples of a successful name change is BellSouth's move to Vodafone. The product range is extremely narrow and there is little doubt as to what they offer, or what the brand stands for –"We only do mobile".
In National Mutual's case there has been a significant shift in its investment products. Going are its fixed deposit funds, fixed interest trust, diversified property trust and index fund, while its New Zealand Leaders Trust is being removed from sale.
Director personal funds management, Mark Pickering, says National Mutual is concentrating on the areas it has strong investment capabilities. The group's traditional strength has been in cash, mortgages and multi-sector mandates, and more recently, as evidenced by the NZ Selected Equities Trust, in shares.
Pickering says what National Mutual is saying is that it can't be all things to all people. The rationalisation also reflects overall market trends.
EQUITY FUNDS
The change in AXA's range of equity trusts reflects what is happening in the market. Of the three types of share funds, passive, index hugging and active, money is moving out of index-huggers into either index or actively managed funds.
For this reason the NZ Leaders Trust, which is essentially an index-hugger is being removed from sale, but not wound up yet.
Pickering says AXA is keeping its options open on how it deals with this fund and is giving people the opportunity to move out it.
"We anticipate they will move to other funds over the next six to 12 months," he says.
Closing the relatively new Kiwi Share Index Trust is to some degree recognition of a manager which jumped on the passive fund bandwagon.
Pickering says part of his mandate is to have a sensible approach to new product launches. Any new fund has to meet specific criteria, namely, the company has to have sufficient resources to run the fund properly, it has to be a leader in investment performance, the fund has to be profitable and have growth potential. Index funds failed to meet a number of these hurdles.
The one area National Mutual is setting up a fund is international equities. As part of the rationalisation the company plans to launch a global fund run by New York-based, AXA-owned Alliance Capital.
The Alliance fund being used by National Mutual has a top track record and is actively managed, with a bottom-up, growth style.
Pickering says the addition of this fund acknowledges there is a gap in National Mutual's product range, plus it also recognises that New Zealand investors are starting to increase their holdings of international equities at the expense of local ones.
Like in other areas National Mutual will continue to operate in the wholesale area, but not the retail end. Pickering says wholesale clients will be able to use the group's two index funds, the Super 10 and Mid Cap funds.
PROPERTY
National Mutual hasn't been considered one of the big guns when it comes to running property portfolios and assets. Consequently the company is moving out of the retail market, but staying in the wholesale end.
Pickering says the property management is done out of the Melbourne office and local management has been outsourced to Colliers Jardine.
He says one look at the market for unlisted property trusts shows that the Armstrong Jones MFL fund has a stranglehold on the market and the next two trusts, in terms of size, are specialist funds, namely the Calan Healthcare Trust and the New Zealand Rural Property Trust.
Since National Mutual is neither huge, like MFL, and it doesn't deal in the specialised markets, property didn't meet a number of the company's criteria.
INSURANCE
Fewer changes are planned for National Mutual's range of insurance products. This is largely due to the work that has been done over the past few years in developing a comprehensive product suite that meets the needs of customers.
The top-of-the-line Concord range will continue to be refined, however the Goldline range of superannuation products (which included risk coverage) is being removed from sale. National Mutual plans that these customers will use Concord for their risk protection.
National Mutual Health, which has the StayWell range, of medical cover will remain. "Recent trends in the health insurance market have seen an increased demand for major medical coverage. The StayWell range are products for today and the future."
In the less popular, traditional sectors of endowment and whole of life, some changes will be made. Whole of Life is an important product, particularly in business insurance area, will be whittled down from two to one product over the next few months. Endowment policies will continue to be offered although they are only sold at very low levels.
"Over the next few months we will be improving out understanding of where this product fits and develop strategies to increase the number of sales and the level of knowledge about this product," National Mutual says.
| « Some Dividend Yields Are More Equal Than Others | King builds an empire » |
Special Offers
Commenting is closed
|
|
Printable version |
|
Email to a friend |
