NZ fund to farm out $1.3 billion global equities mandate

The New Zealand Government Superannuation Fund (GSF) has put its $1.3 billion international equities mandate out to tender with a number of Australian implemented consultants understood to be in the running.

GSF, a defined benefit fund for state sector employees, currently splits its international equities between two passive mandates with AMP managing two-thirds and Axa the remaining third. Alan Langford, GSF chief executive, said recent tax changes in New Zealand, due to take effect on October 1, had made a shift to an active management style likely. “We’re considering a variety of options,” Langford said. “An implemented consulting approach is one of those options. We might give some or all or none [of the international equities mandate] to an implemented consultant or to more than one.” The new tax rules have abolished a capital gains tax concession for passive investment funds and a number of New Zealand super funds and managers, including AMP, are making a shift to active management for international and local equities. “We’ve been very open about the need to find new investment opportunities,” Langford said. He said a decision about the GSF international equities mandate should be made by September this year. It is understood Sydney-based consultancy firm Chant West is advising the GSF tender. According to its 2006 annual report, GSF, which closed to new members 15 years ago, had total assets of $3.4 billion with international equities comprising 41.6 per cent of the total investments. The fund’s long-term target for international equities has been set at 42.5 per cent of total assets. Until 2001 when the government handed its management to an external board all of GSF assets were held in New Zealand fixed interest securities.