Summary

  • AMP Wealth Management plans to abandon its active management approach in its managed funds, including KiwiSaver scheme to a new passive structure.
  • BlackRock Investment Management would be the new hire to deliver the new passive structure with funds expected to transition by the mid of 2021.
  • The changes would apply to the majority of the AMP management funds apart from KiwiSaver and also to its NZ Retirement Trust, which is a corporate Superannuation scheme.
  • The next stage of investment transformation would involve repricing of funds of the AMP KiwiSaver scheme and implementation of a sustainable investment approach.

AMP Wealth Management has highlighted a new fund management approach for its NZ wealth management business, with the division shifting towards a mainly index-based strategy. 

The wealth manager declared that it would move from active to passive fund management structure in the new approach that will cover its management funds including AMP KiwiSaver scheme, its offering as per NZ’s voluntary retirement savings system.

Index-tracking is an economical investment tool, and is also used by other operators of KiwiSaver, such as SuperLife, ASB, Simplicity to name a few.

The AMP KiwiSaver scheme that contains savings worth $6.2 billion invested on behalf of 218,789 members would transfer the management of funds to US-based global-tracking fund manager BlackRock Inc. by the mid of 2021.

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Jeff Ruscoe, acting chief executive of AMP Asset Management, stated that the Group had delivered positive returns for consumers using its fund advisor-sister firm AMP Capital Investors.

He also added that the move to a primarily index-tracking investment management strategy was the correct choice. It would ensure that the firm is best-positioned to generate long-term returns, add value for money and continue to assist the financial well-being of customers.

In addition to overseeing the assets of the AMP KiwiSaver, BlackRock will take over the operation of the biggest private super scheme in NZ, the $3.42 billion New Zealand Retirement Trust with 37,828 members.

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AMP stated that there was no need for investors in the AMP KiwiSaver scheme to make any decisions about the move. However, KiwiSavers who are not happy with the move may turn to other KiwiSaver schemes.

Steps ahead

The new modifications will imply that now instead of letting people make investment decisions, they will be powered by computer algorithms, within which the funds track a specific index like NZX-50 index or S&P 500 investing in firms depending on their weighting in the index.

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Mr Ruscoe stated that the next step of the investment turnaround would be the repricing of the AMP KiwiSaver funds and enactment of sustainable investment strategy. He noted that the new partnership with BlackRock would allow sustainability to be addressed more, including reducing the effects of climate change.

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AMP Capital NZ would keep on giving active investment management alternatives on its NZ advice WealthView. At present, AMP is examining its impending operations, as well as thinking whether to retain or sell its asset management business in NZ.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

 

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