The proposed Big Cullen Fund will be a useful fillip to New Zealand's shrinking funds management industry, and it may be an important catalyst to provide investors with lower fees and better service.
Over recent years there has been an increasing trend for managers to move some or all of their investment team across the Tasman, plus the industry has had relatively low growth.
Most recently we have seen firms like Tower and Colonial either create trans-Tasman asset management teams or actually move some of the functions across to Australia.
Guardian Trust Funds Management chief executive Anthony Quirk says the establishment of the Big Cullen Fund will be good for the industry.
"While Sydney is going to be the investment management centre for Australasia, (and they hope for Asia as well) this does not mean that New Zealand cannot have a niche funds management industry as well," he says.
"My vision is that New Zealand becomes the ‘Edinburgh of the South Pacific’.
Edinburgh has a reasonably large funds management industry despite London being the financial centre of Great Britain and, increasingly, Europe.
Quirk says this is partly for historic reasons with the Scots being amongst the first to embrace worldwide investment and carving a niche for themselves as a result.
"Edinburgh has continued to thrive as it has the critical mass to justify a niche funds management industry in an increasingly globalised sector. It is especially attractive to family minded or ‘clean and green’ investment management professionals who prefer to work there rather than in the ‘rat race’ of either London or New York."
"The (Big Cullen) Fund may also help to bring about a similar situation in New Zealand where investment professionals can stay for life style reasons and still be part of a vibrant and healthy financial investment community. "
The fund will also make help improve the financial viability of the funds management business which is based around economies of scale.
With competition and increasing economies of scale working together investors should be able to see a better deal on fees and service.
Quirk has two caveats on this scenario.
Firstly, it will be either a feast or famine for domestically based fund managers, as not all of them will win a mandate to manage some of the fund's money.
Secondly, the fund is likely to be the catalyst which attracts more international players to what is already a highly competitive market.
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