AMP Capital uses SMSF capability to go direct in New Zealand

Grant Hassell
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(pictured: Grant Hassell)

AMP Capital has dropped the minimum investment for direct access to its range of 24 funds from NZ$100,000 to NZ$2,000 as it tests out demand in the non-advised retail market in New Zealand. The manager is capitalising on its SMSF capabilities built up in Australia for the new marketing initiative.

Grant Hassell, AMP Capital NZ chief, said the updated direct retail service – due to go live this April – was a logical development given the group’s now-standardised range of funds under the Financial Markets Conduct Act (FMC) regulations and improvements in technology.

In a statement, he said the $100,000 minimum had previously locked out many investors who were keen to buy direct into the AMP Capital funds.

“Now that we have transitioned into the new FMCA regime, it is far easier for investors to locate and importantly understand our funds,” Hassell said in the statement.

“We have lowered the minimum amount to $2,000 to help those investors who are confident in making their own decisions get access to such high-quality assets as global property and global infrastructure along with traditional asset class such as corporate bonds and equities.”

All direct business would be conducted online with investors receiving the same sticker price as per the general product disclosure statements (PDS).

“We won’t be discounting fees for direct investors,” Hassell told Investment News NZ.

He said the direct business would also be serviced by the group’s call centre in Wellington and the Auckland retail team headed by David Buell, retail associate director.

Buell told the AMP Capital NZ publication ‘Taking Stock’ last month, the NZ direct business would build on AMP Australia’s self-managed superannuation fund (SMSF) experience.

The broader AMP group owns an SMSF admin business while AMP Capital sells direct to that market via a suite of wholesale funds with a A$10,000 minimum.

According to the latest statistics, the SMSF sector recorded total funds under management of almost A$600 billion as at the end of 2015, representing almost 30 per cent of Australia’s A$2 trillion-plus super market.

“The knowledge built up over a number of years [in the SMSF market] offers valuable insights which will help us here in New Zealand, and gives a greater degree of credibility comparatively speaking over a new entrant in the market,” Buell told Taking Stock.

“Leveraging off the existing Australian self-managed funds business also means lower set up costs and therefore greater efficiencies for New Zealand investors.”

A spokesperson for AMP Capital Australia said the Australian arm of the fund manager was not planning a similar direct-to-consumer model along the lines of the soon-to-be-launched NZ service.

“This is a New Zealand-only initiative and has no linkages to the Australian business,” the spokesperson said.

Hassell said AMP Capital would adopt a relatively low-key approach to marketing the new direct funds line.

“We plan to take it quietly to begin with,” he said. “We want to make sure the servicing team can handle any demand – and we’ll add on as needed,” he said.

While AMP planned to tack on investor “information and educational tools”, Hassell said the front-end would not include ‘robo-advice’ components such as online risk-profiling.

“This is strictly for non-advised clients,” he said. “If they want any advice we’ll refer them to an AMP financial planner.”

Meanwhile, AMP Capital is also set to add another investment option with the Dynamic Asset Allocation Fund (DAAF) due to launch this April.

Keith Poore, AMP Capital NZ head of investment strategy, said the DAAF would apply the group’s view on asset class pricing to an underlying range of mainly passive funds.

Poore said AMP Capital Australia had run a similar product – the Dynamic Markets Fund – for a couple of years.

“We will tap into the Australian process but we’ll be managing NZ equities and bonds from here and making currency decisions,” he said. “It’s built for NZ investors.”

Poore said while AMP would manage most of the underlying passive funds in-house – including NZ equities – some asset classes would be outsourced to other managers (for example, State Street for global equities).

“Doing it in-house enables us to offer better pricing,” he said. “But we do have the ability to use other products, including exchange-traded funds (ETFs) for assets like global property where needed.”

Poore said the DAAF was a “pure play on asset allocation” aimed at investors who wanted more than a ‘set and forget’ approach to the process.

“It will be a low-cost option for investors who want to take a view on asset allocation but may not be able to do it themselves,” he said.

The DAAF would probably appeal to small- to mid-sized institutional investors and the retail market, Poore said.

David Chaplin, Investment News NZ

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