The New Zealand Superannuation Fund has sparked up its dormant internal local equities passive mandate under a revised investment policy published at the end of August. The mandate now sits beside about NZ$600 million in active NZ shares.
In 2013, NZ Super switched to running its-then approximately NZ$300 million inhouse local shares portfolio from passive to active management. The fund originally took the passive local equities internally in 2009 after ending an external mandate with the NZX-owned index manager Smartshares. However, last month NZ Super reinstated the passive local shares capacity with an updated ‘internal investment mandate’ (IIM).
According to the rebooted IIM 3, the purpose of the new NZ Super passive local equity mandate is to “facilitate completion of rebalancing target weights for the NZ equity asset class”.
“The mandate is intended to passively track the benchmark index, subject to implementation efficiency and minimising market impact,” the fund’s policy says. The passive mandate will work in tandem with the inhouse active shares portfolio.
An NZ Super spokesperson said the move was essentially designed to help the fund implement actual investments as they varied against the recently revised reference portfolio.
“The mandate will help buffer our active managers (internal and external) from changes to the fund’s exposure to New Zealand equities that are driven by other portfolio movements, such as the sell-down of passive equity holdings to fund the purchase of new active investments and vice versa,” the NZ Super spokesperson said.
She said the fund would not reveal the size of its passive local equities exposure due to commercial sensitivities.
It is understood the NZ in-house local shares team currently manages in excess of $600 million, comprising the original internal mandate and the ‘suspended’ active portfolio previously managed by Milford Asset Management.
– David Chaplin, Investment News NZ
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