by David Chaplin
The big Netherlands-headquartered investment performance attribution firm, Ortec Finance, has completed the double in both Australia and New Zealand, landing the two largest institutional funds in each country as clients. It picked up NZ’s Accident Compensation Corporation (ACC) fund late last month. Another big Australian fund is set to follow.
The ACC confirmed it would use the Ortec PEARL platform to evaluate investment attribution across the NZ$44 billion (about A$42 billion) fund. This followed the A$170 billion Australian Super, the similarly sized Future Fund and NZ$45 billion NZ Superannuation Fund as new clients. NZ Super was the first client in the region to use the PEARL system, followed by the two largest Australian funds. Stefano Lee, Ortec Pacific managing director, said last week: “We now have the two largest players in NZ and the biggest Australian sovereign and superannuation funds as clients. And we’re close to finalising a deal with another Australian super fund.”
Established in Rotterdam in 1981 (and rebooted under its current structure in 2007 following a management buyout), Ortec opened its first Australian office, in Melbourne, only this January. Lee (full name Stefano Seung Jin Lee), who spent eight years with rival financial software firm FactSet, said the region held significant growth potential for Ortec. His company was one of the few providers that analysed performance attribution from an asset owner’s point of view. “Most other vendors created investment performance attribution for fund managers with a bottom-up view of assets while ours was built with a top-down perspective,” he said. Prior to signing with Ortec, the ACC fund calculated all performance attribution measures in-house.
In a statement, Jonathan Williams, ACC investment risks manager, said: “We undertook a comprehensive RFP process to select the right solution for our investment process which resulted in us selecting Ortec Finance’s PEARL. The ease of use, quality of analytics and capabilities of PEARL made Ortec Finance the obvious partner for ACC. PEARL will improve the quality and transparency of our performance reporting, adding greater ability to analyse the performance and risk of our investment decisions.” It is understood, Ortec was competing with the usual range of investment attribution firms including FactSet for the ACC prize.
The ACC fund, which is heavily weighted to fixed income assets, has outperformed its home-built ‘composite’ investment benchmarks for all but two of the last 24 years. Over the financial year ending June 30, 2019, the fund recorded a rare benchmark miss despite returning NZ$3.5 billion above budget in nominal terms. And after over 25 years of stability at the top, the ACC chief investment officer, Nicholas Bagnall, resigned late last year to establish a new wholesale boutique fund business, Te Ahumairangi Investment Management (TAIM). However, in a 12-month exclusive deal, TAIM’s first mandate is running an approximately NZ$1.6 billion global equities portfolio for the ACC fund. TAIM should formally take over the ACC global shares portfolio next month.
The ACC portfolio is also facing a shake-up under new climate change and ‘carbon intensity’ targets announced last month. Lee said Ortec also offers carbon and climate-related portfolio analysis tools. The firm provides performance attribution services in over 20 jurisdictions to more than 500 clients who collectively manage about NZ$5.2 trillion.
– Investment News NZ