Asset allocation help coming

NZIER is to launch a tool that will help financial advisers with asset allocation questions.

Tuesday, April 21st 2015, 6:00AM 2 Comments

by Susan Edmunds

Aaron Drew, formerly of the NZ Super Fund, said the analysis, available on a subscription basis similar to the institute’s quarterly predictions, would be unique in that it is independent, uses a longer investment and analytical time horizon than usual, broader coverage of the NZ investment environment and NZ context and detail.

NZIER would offer an industry view of the risk and return available across the full suite of asset classes, both listed and unlisted investment opportunities at a class level available to New Zealanders.

That would include things such as equities and bonds but also foreign exchange and residential property.

Drew said it would be helpful for advisers deciding how much they wanted to deviate from strategic asset allocation benchmarks. “It could also be used as information to support bringing a new asset class into a portfolio.”

NZIER was aiming to launch it as a service in May, he said. Drew said it was too early to say what the service would cost.

As well as financial advisers, the service might appeal to institutional investors, large corporates wanting advice on the currency and government agencies dealing with offshore investors who wanted a broad snapshot of the investment environment across New Zealand.

He said there was a gap in the market for independent research.

Drew will present the offer at the upcoming Perfecting Investment Portfolios event.

Organiser Clayton Coplestone, of Heathcote Investment Partners, said there was a need for the service.

“Advisers get a bit obsessed with research reports and there’s plenty of content out there but there’s a hole when it comes to how to put it together, what goes with what.”

He said it was the first of two asset allocations that would be made available to advisers over the coming months. The second is to be provided by a global organisation that had recently completed due diligence on the New Zealand market.

Tags: Clayton Copplestone

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Comments from our readers

On 21 April 2015 at 10:47 am Brent Sheather said:

There are at least three problems with a dynamic asset allocation model for retail investors. First the obvious one that it is very difficult to know the prospective returns in each asset class but more importantly for retail is the fact that switching between asset classes is very expensive. It might cost mum and dad in Opotiki five times as much to switch from bonds to equities than it would cost the NZ Super Fund. These costs usually eat in to any additional return that might be available if you are lucky enough to call things right. In addition mum and dad aren’t buying the same things that the Super Fund buys eg in venture capital mum and dad get stung with two and twenty whereas the Super Fund can be a side investor (along with the independent directors of the venture capital fund!) and avoid most of the fees.

Regards
Brent

On 21 April 2015 at 6:29 pm Pragmatic said:

A bigger issue with asset allocation (either strategic or tactical) is getting it wrong. Talk to those msci index investors who followed to Japanese market to the bottom a few decades ago. LoL

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