Smartshares first to get investment passport

NZX Smartshares first in the world to get a "passport" which lets investors in Asia to invest in its funds.

Thursday, January 27th 2022, 7:07AM

An "investment passport" allows fund managers in one country to offer their funds in other jurisdictions without having to establish local operations.

The Financial Markets Authority (FMA) has approved Smartshares Limited as a passport fund under the Asia Region Funds Passport (ARFP).

It is issued under the Asia Region Funds Passport (ARFP), a multilateral agreement between New Zealand, Australia, Japan, Thailand, and The Republic of Korea that allows investors and managed funds from those countries to do business more easily.

The initiative facilitates the offering of liquid and well-diversified managed funds among the signatory economies. Smartshares is the first fund manager to be approved under the ARFP.

Smartshares will now be able to offer its approved fund for distribution in Australia, Thailand, Japan, or Korea according to the rules specified in the Memorandum of Cooperation (MoC).

The first Smartshares product offered through the passport will be its New Zealand dividend fund, which tracks an index of the 25 highest dividend paying stocks on the NZX and includes sustainable electricity producers like Meridian Energy, Mercury and Contact Energy, which Stevens is betting will be attractive to overseas investors.

FMA Director of Supervision James Greig said: “The ARFP is an internationally recognised system and it’s encouraging to see a New Zealand investment firm to be the first to be granted a passport."

“The Financial Markets Conduct Act balances innovation with robust regulation and has allowed New Zealand to participate in the agreement, which opens new markets for New Zealand’s fund managers and should broaden investment options available to New Zealanders,” Greig said.

The ARFP was launched in February 2019. In preparation for the multilateral arrangement, the FMA, the Ministry of Business, Innovation and Employment (MBIE), and Companies Office - with input from various industry participants - have introduced changes to the country’s Disclose register and developed new forms, systems, processes, and guidance.

New regulations have also been developed under the Financial Markets Conduct Act.

Tags: FMA