AMP move may cause market ripples

AMP Capital’s outsourcing of its equity management is being described as bad news for New Zealand investors and markets.

Friday, February 13th 2015, 6:00AM

by Susan Edmunds

It was announced last month that AMP Capital’s head of equities, Guy Eliffe, and senior analyst Jonathan Davis would leave the business as the management was moved to a third party.

Rebecca Thomas, of Mint Asset Management, said she was expecting to see some effects of the outsourcing on the wider market soon.

AMP is currently in the RFP process to appoint a manager.

Thomas said it was sad whenever there was a contraction in funds management in New Zealand. “My preference is to have more choices of fund managers in New Zealand, not less. We have a concentration of funds in a few hands. From a market perspective it’s good for investors to have choice.”

She said it could make future IPO activity more difficult. “There needs to be significant players to provide underwriting capacity and the capital markets New Zealand needs.”

But she said the benefit for the market was that money would be spread around more managers. “If larger players feel New Zealand hasn’t got sufficient scale yet for them to retain manufacturing capacity, the impact is that the money is spread amongst a wider group of fund managers.”

It should not cause any problems for investors, she said. “AMP already use third-party managers as well as their own capacity so they have a well-oiled machine in terms of manager selection, there’s strong capability there. But it’s sad Australian institutions don’t think they should keep a presence in New Zealand.”

In the short-term, a new manager taking over the funds could spark an increase in buy and sell activity if the new managers are not comfortable with the existing AMP portfolios.

An AMP spokeswoman said it would not be appropriate to comment until a manager was appointed.

Tags: AMP Capital Mint Asset Management Rebecca Thomas