Australian fund manager IOOF quits NZ

Australian fund manager IOOF is leaving New Zealand after agreeing to sell its Kiwi client rights to local firm, Britannia Financial Services for an undisclosed sum.

Friday, April 17th 2020, 1:23PM

by BusinessDesk

The fund manager’s Integral Master Trust managed five funds for more than 5,000 clients with about A$553 million under administration at March 31. That was IOOF’s primary business in New Zealand, and it closed its local operation effective from April 15.

IOOF said the sale proceeds weren’t material to earnings, and that the cost of closing down its Kiwi operation was negligible.

“The divestment of IOOF’s business interests in New Zealand reinforces our focus of simplifying the business around our advice-led strategy and opportunities,” chief executive Renato Mota said in a statement to the ASX yesterday.

IOOF New Zealand’s June 2019 accounts show the company received an offer from a third party to buy its Kiwi operations in October last year, and that the parent was committed to funding the winding down of the entity.

The New Zealand unit generated a profit of $664,000 on revenue of $4.9 million, the bulk of which came from fees from managing the unit trusts.

IOOF’s IMT global equities fund had $69.9 million under management at Dec. 31, and generated an average annual return after fees and tax of 8.77 percent over the past five years. Its basic management fee in 2019 was 0.6 percent and other charges amounted to 0.69 percent.

The fixed interest fund – with $1.3 million under management – generated an average annual return of 1.68 percent with a 2019 basic fee of 0.6 percent and other charges of 0.62 percent.

The diversified 60 fund – with $440.5 million under management – reported an average return of 6.09 percent with 2019 fees of 0.6 percent and 0.62 percent, and the diversified 40 fund – with $121.3 million under management – reported an average return of 4.56 percent with 2019 fees of 0.6 percent and 0.59 percent.

The IMT cash holding fund had $15.6 million under management and generated an average return of 1.69 percent over the past five years. Its members paid fees of 0.4 percent and 0.41 percent in 2019.

Britannia started life as a niche company offering professional pension transfers from the UK in 1996 and has diversified into a financial services provider. It has three schemes with $556.5 million under management for 5,348 clients.

Gavin Dixon, chief executive of Britannia, said his firm would offer financial advice to a number of members of the IMT.

“The IMT represents an excellent value-for-money platform for people who wish to invest to fulfil a wide range of investment needs. It is based on solid investment foundations and Britannia has been a strong supporter of it for almost a decade.

"It is supported by great advisers across the country and we are looking forward to working with all of them to continue enhancing the product proposition for the benefit of their clients.”

He said the Britannia group invested into IMT in 2011 and embraced the deep academic research underpinning its investment philosophy. The acquisition of the IMT would enable Britannia to expand its product offering beyond superannuation schemes without changing its investment philosophy.

Tags: IOOF