NZ Super fund and Milford cut ties

[UPDATED with Quirk comments] The Guardians and Milford have mutually agreed to part ways a year after the company was suspended as a manager.

Thursday, April 21st 2016, 1:03PM

Anthony Quirk

Milford had its $281 million mandate suspended with the fund a year ago following allegations of market manipulation. Since then it has not managed any Super Fund money. Nine months ago NZ Super awarded a mandate to Mint Asset Management.

"We consider that our active equity portfolio is adequately catered for through our in-house team and mandates with our existing two managers," a spokesman for the NZ Super Fund says.

"Milford has advised that it wishes to focus resources on managing New Zealand equities for its growing KiwiSaver, Private Wealth and other predominantly retail client groups."

"We have no current plans to appoint a third external fund manager to replace Milford. The parting is an amicable one and we expect that what has been a long-standing relationship will continue cordially, albeit not in an investor/manager sense."

Currently NZ Super has 4% of its assets invested into New Zealand equities, this money is managed under three mandates; one part is internally managed and the other two are mandates with Devon Funds Management and Mint Asset Management. On top of this the NZ Super Fund has investments in Z Energy, as part of its infrastructure mandate and MetLife Care as a private equity investment.

Milford managing director Anthony Quirk says the firm doesn't have any capacity for wholesale mandates in NZ equities. In total it has $3.6 billion in funds under management and around $1 billion of that is in local shares.

"We are not open for any wholesale accounts in New Zealand equities.," he says.

Quirk say it has to be responsible about how Milford manages money and notes that in February 2014 it actually returned some funds to the NZ Super Fund as it didn't have the ability to manage the full mandate.

Milford's focus is on growing its KiwiSaver and Private Wealth businesses which have better margins and stickability than wholesale mandates.

He describes the $850 million Private Wealth business as "a hidden gem".

Quirk says the Milford business is now much stronger than it was when the market manipulation allegations first arose, these include implementing front and middle office services from international firm Charles River. He says the firm "learnt some lessons", has made changes and has "really got momentum" a the moment.

Tags: Milford Asset Management NZ Super Fund