AMP Capital has launched three new passively-managed index fund options for New Zealand retail investors to make it easier for them to access additional cost-effective capabilities.
AMP Capital already offers a range of passive funds for wholesale clients seeking low-cost exposure to listed markets. In response to increasing demand for strategies offering broad market exposure with low operating expenses, three new funds are now available to retail investors.
The new funds include the All Country Global Shares Index Fund, which aims to provide a return that closely matches the return of the MSCI All Country World Index ex Tobacco Index; the NZ Shares Index Fund, which aims to provide a return that closely matches the return of the S&P/NZX 50 Index; and the Hedged Global Fixed Interest Index Fund, which aims to provide a return that closely matches the Bloomberg Barclays Global Aggregate Bond Index (this fund also excludes Tobacco), fully hedged to the New Zealand dollar.
At the same time the minimum investment amount for retail investors has been lowered to $50 from $2,000, and the funds will pay a distribution every six months. The funds are also PIE-compliant, which may provide a tax advantage for some investors on higher income tax rates.
Tax efficiency has also been an important consideration in structuring the global funds. The All Country Global Shares Index (underlying funds), NZ Shares Index Fund and the Hedged Global Fixed Interest Fund have segregated mandates with the underlying investment managers in New Zealand allowing for any foreign and New Zealand tax credits to flow through to the New Zealand vehicle. This also provides control over the investment guidelines, allowing the funds to be easily set up to exclude prohibitive investments including tobacco, which is excluded under AMP Capital's ethical framework.
"The three additional index funds offer retail investors a low-cost exposure to these asset classes" - Grant Hassell
Grant Hassell, Managing Director & Chief Investment Officer, said: "AMP Capital is committed to delivering both active and passive capabilities that match our clients' needs as we recognise the role they both play in a diversified portfolio.
"Introducing the three additional index funds to retail investors enables us to offer these capabilities to a wider universe of clients seeking low-cost exposure to these asset classes.
"The new funds complement our diverse range of actively-managed funds available to retail investors. We now offer 26 funds for retail investors seeking access to high-quality assets such as global property and global infrastructure, alongside traditional asset class such as corporate bonds and equities."
The funds are available on AMP Capital's direct investment platform from 1 December 2017, and InvestNow from mid-December.
Adopting 'responsible investment' criteria
AMP Capital has also announced changes to the investment strategy for the AMP Capital Hedged Global Fixed Interest Fund. This follows the completion of a review into AMP Capital's multi-manager global fixed interest strategy.
The fund will now be managed to specific ‘responsible investment' criteria, which encourages investment in companies with strong environmental, social and governance (ESG) characteristics. The underlying managers will be governed by AMP Capital's Responsible Investment Charter.
The integration of ESG factors will increase the responsible investment focus of the fund and leverage AMP Capital's expertise in this area. This will help provide greater insights into the areas of potential risk and opportunity that can impact the value, performance (risk and/or return) and reputation of the fund's underlying investments.
The new strategy will also see the inclusion of an AMP Capital Australia global sovereign bond mandate alongside existing manager Colchester. Diversifying the global sovereign bonds segment between two equally-weighted managers provides greater diversification and a smoother return profile.
A weighted composite benchmark is also being introduced to replace the current Bloomberg Barclays Global Aggregate Index. This composite benchmark will align benchmark weightings with the underlying managers' objectives and strategies.
These changes take effect from 30 November 2017.
Product Disclosure Statements for the Index Funds (the Index Funds Product Disclosure Statement) and the Hedged Global Fixed Interest Fund (the Cash and Fixed Interest Funds Product Disclosure Statement) are available from the AMP Capital website www.ampcapital.co.nz. The manager and issuer of the Index Funds and the Hedged Global Fixed Interest Fund is AMP Investment Management (N.Z.) Limited, a wholly owned subsidiary of AMP Capital.