Investors want more engagement

Mercer's managing director says investors are starting to demand more engagement from the people managing their money.

Tuesday, June 7th 2016, 6:00AM

by Susan Edmunds

Mercer and Nikko Asset Management are two fund managers that have reported significant growth in assets under management in this country over the past year.

The two have grown 20% and 25%, respectively, taking both past the $5 billion AUM mark.

Mercer managing director Martin Lewington said the growth was due to his firm taking an increasing share of the market, and holding on to the KiwiSaver members who defaulted into its funds.

He said his team had been working to offer better customer engagement, which had begun to pay off.

Mercer has been a default KiwiSaver provider since the scheme's inception, with 6.9% annualised returns over the past five years.

It passed the $1 billion KiwiSaver AUM mark in early 2015, although it charges the highest member fee of the default conservative funds.

Lewington said the manager's solid performance over the past few years had started to reap rewards. "We've had year on year of being in the top quartile. That's something that people are starting to notice."

But he said while some investors might chase past returns, it was not a big driver of the churn he had seen in the market.

He said Mercer research showed investors also valued good communication from their providers and a skilled investment team.

Mercer would be able to offer investors an "enhanced digital platform" within the next 12 months, he said.

"I'd like to think it's all about the experience and service. Delivering what you say you're going to do rather than chasing returns per se. If you're in a balanced fund, you should have an expectation of certain returns and that the balanced fund will do what it says it will."

Lewington said he would like to see Mercer's New Zealand business double in size and scale over the next five years.

Tags: KiwiSaver Mercer