(Pictured: Malcolm Johnson)
by David Chaplin
Mercer has lost one of its largest New Zealand investment consulting gigs, dumped in favour of Russell Investments by the NZ$500 million plus Universities Superannuation Scheme.
The move will see the Universities scheme transition to a Russell implemented consulting solution over the next few months. It is understood that this is Russell New Zealand’s first major implemented consulting appointment for several years.
Malcolm Johnson, chair of the Universities Super board of trustees, said the scheme put the investment consulting job out for tender last year.
“I was appointed as independent chair about a year ago, after which the scheme carried out a governance review that included looking at the investment business model,” Johnson said. “We decided that an implemented consulting solution best suits the governance structure of the scheme.”
As well as an independent chair, the scheme’s board includes two university-appointed and two member-elected trustees.
According to the latest Universities Super accounts, Mercer earned more than $300,000 in investment consulting fees over the year to December, 2013. Despite losing the consulting role, Mercer will remain as administration manager for the Universities scheme.
Fisher Funds stands to lose a $170 million global bonds mandate (invested via PIMCO and Wellington) following the Russell transition. The Universities scheme will also drop international equities allocations to Newton Investment Management (NZ$111 million) and the Colonial First State RealIndex Global Share Fund (NZ$75 million).
The Universities scheme, which provides retirement benefits for staff in most of the country’s tertiary institutions, is one of the few remaining stand-alone super schemes in New Zealand.
The growth of the government-sponsored KiwiSaver regime, introduced in 2007, has crowded out many employer and industry-based super schemes.
New regulations introduced this year have also prompted several other long-standing employer super funds, including the NZ$200 million plus ANZ Staff Super scheme, to wind up.
Meanwhile, the NZ$320 million Westpac NZ staff super scheme is expected to announce the result of its investment consultant review this week. It is understood the incumbent, Mercer, is again likely to lose out to an implemented consulting solution.
Mercer had not responded to a query prior to deadline. Russell was also unable to comment due to press restrictions surrounding its recent takeover by the London Stock Exchange.