In a surprise move last week, ANZ Investments awarded the Sydney-based arm of Nikko Asset Management a NZ$850 million (A$766 million) Australian equities mandate after Arnhem’s planned closure.
Despite its relatively high-profile brand (dating back to its days as Tyndall), Nikko was not among consultants’ top picks for the juicy ANZ gig – ostensibly triggered by the closure of incumbent Australian manager, Arnhem Investment Management, announced in June.
However, it is understood that ANZ had been considering replacing Arnhem for some time prior to the announced closure. As at June the ANZ mandate, which feeds into the bank’s multiple KiwiSaver schemes and investment funds, amounted to more than half of Arnhem’s A$1.4 billion in assets under management.
ANZ appointed Arnhem as a specialist Australian equities manager in 2010, sticking with the firm despite a long period of underperformance. Earlier this month, JCP Investment Partners took over the remains of the Arnhem Australian equities business with a full transition planned on August 17.
In a statement, newly-confirmed ANZ Investments CIO, Paul Huxford, said: “Throughout our review of Australian equity managers over the past year, Nikko AM Australia scored very highly. We were impressed with the experience and stability of their Australian Equity team, investment process and performance and strong business fundamentals.”
ANZ also runs an Australian share book in-house under acting head of Australasian equities, Craig Brown – who took over the interim role last October from Mark Brown. According to an ANZ spokesperson, an announcement of a permanent replacement would come “in due course”.
Meanwhile, the transition from Arnhem to the Nikko portfolio holdings was reportedly almost completed last week.
The 11-strong Nikko Australian equities team – headed by Brad Potter – typically manages a concentrated portfolio of between 25-30 stocks. Nikko has about A$1.4 billion under management across its range of six Australian equity funds, of which over $1 billion sits in the flagship Australian share wholesale fund.
Across all asset classes, Nikko Australia manages some A$9 billion, suggesting the ANZ mandate represents an almost 10 per cent jump in assets under management.
The core Nikko Australian equities fund has returned about 10.8 per cent per annum after fees since inception in 1995 against the benchmark 9.7 per cent.
Coincidentally, the fund’s top holding is ANZ Bank, which constitutes about 10 per cent of the portfolio.
– David Chaplin, Investment News NZ