Nikko abandons Ark

Nikko Investment Management in New Zealand is changing its diversified global equities strategy by dropping high-profile Cathie Wood's Ark Invest and adding three other more conventional fund managers.

Friday, September 6th 2024, 9:00AM

California-based Wood's investment philosophy is to invest in disruptive technology companies and Nikko has championed her various funds for a number of years.

Her flagship listed Ark Innovation exchange traded fund (ETF) has had periods of hugely out-performing the benchmark S&P 500 Index but is down nearly 15% year-to-date.

Previously, Ark had been paired with Nikko's global equities fund based in Edinburgh to make up Nikko NZ's diversified global equities strategy but, while the NZ arm is keeping the Edinburgh-based fund, it has now added London-based Royal London and JP Morgan and California-based WCM Investment Management to its diversifed global equities strategy.

Nikko's head of diversified funds and external managers, Alan Clarke, who was appointed in August last year from ANZ Investments, told a presentation for financial advisers in Wellington that including Ark had worked well in a zero-interest rate and pre-covid environment, but wa no longer appropriate for the strategy.

“If you're having conversations with clients every quarter about one underlying strategy, you've probably got the allocation wrong,” Clarke said.

JP Morgan and WCM will now provide the growth element in Nikko's diversified global stategy and will also add property to the growth mix, Clarke said.

Since he joined Nikko, he has been talking to clients about their requirements and Nikko wants to be diversifed by asset class including bonds, equities, listed property and cash, he said.

It also wants regional diversity and diversified sources of added value.

Some of the changes to the portfolio have already been made and the process should be completed by mid-September, he said.

Nikko is also simplifying how the performance eof the diversified global equities fund is measured by using the appropriate market index as a benchmark rather than the composite benchmark it has used previously.

But Nikko isn't abandoning Ark altogether and will continue providing a stand-alone option to invest in Wood's funds.

Nikko moved to a multi-manager KiwiSaver platform offering in May branded GoalsGetter that includes its own funds, Generate, Harbour Asset Management, Milford Asset Management, Pathfinder and Salt.

The offering includes six growth funds, four balanced funds and two conservative options, as well as six single-category funds, of which Ark is one.

The GoalsGetter platform also offers investment options outside of KiwiSaver scheme to investors.

Tags: Nikko AM