Chief executive Paul Costello says the shift to private equity investments will be “a trend to watch”.
Speaking at the Conferenz Funds Management conference in Auckland yesterday Costello said that there are significant opportunities in the private equity sector and the fund wanted to get in early.
He says by getting in early, and developing a “first mover advantage” the fund will be able to capture good returns.
Costello says the plans to invest in the private equity area were a rational move for the fund for several reasons.
One is that as the fund continues to balloon in size its ability to “move markets” (particularly the New Zealand one) will become more pronounced.
That is a negative for the fund as other players in the market will try to benefit from the movements.
Also private equity suits the funds objectives of providing good long term returns.
One of the problems of these types of funds is that they are subject daily market volatility and when markets go down managers cop criticism. This was most recently illustrated with all the bad press around the Government Superannuation Fund’s foray into international shares.
While the fund was due to start investing in September Costello wouldn’t be drawn on whether the programme had started.
“That’s for us to know and everyone else to try and speculate.”
The Guardians have appointed two managers for New Zealand shares and is due to make two further appointments. One of those will be a small cap manager and the mandate for the fourth is, as-yet, undecided.
AMP Henderson have been appointed to run a large cap fund, while Brook Asset Management has a mandate to run a more active fund with “medium tracking error,” Costello says.
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