New Zealand funds manager, Tower Investments, has embarked on a radical overhaul of its NZ$700 million equities portfolio that will see the majority of its global shares allocation managed in-house.

Sam Stubbs, Tower Investments CEO, says the manager will shift to a “quant-based” investment model for its entire equities portfolio, looking to emulate the long-term, value-investing ethos of Warren Buffet and his mentor Benjamin Graham.

About 70 per cent of the group’s $500 million global equities portfolio will move in-house. Only two of the firm’s eight external managers will retain mandates.

Stubbs says the group’s international shares portfolio needs a shake-up after years of underperformance.
“We’re only keeping an external manager for emerging markets and one other that’s been a consistently good performer,” says Stubbs.

Tower outsources global equities management to Marathon Asset Management, Capital International, AllianceBernstein Australia, Martin Currie Investment Management, Hyperion Asset Management, Integrity Investment Management Australia, Paradice Investment Management and GAM.

Stubbs says the new quant investment model will apply to Tower’s retail and wholesale clients. Tower is the default KiwiSaver provider and offers retail unit trusts

.Tower will begin applying the new quant model to its Australasian shares this week, while work on adjusting the global shares portfolio was due to start on September 1.

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