AMP Wealth switches strategy

AUCKLAND: AMP Wealth Management will ditch using an active management approach in its managed funds, including KiwiSaver, in favour of using global indextracking investment manager BlackRock — a move likely to see a drop in its fees.

AMP’s KiwiSaver scheme is fourthlargest in the market, with $6.2 billion invested on behalf of 218,789 members.

However, its default fund returned an average of only 4.3% per annum over the five years to June 30, ranking at the bottom for the nine providers with default funds, Morningstar figures show.

Its balanced and growth funds have also languished at or near the bottom of the performance tables over the past five years.

The move to using BlackRock’s index tracking style should shave the fees on the funds.

It comes as fund managers compete for government appointment for default provider status; the Government has indicated fee cost will play a major part in its decisionmaking process.

AMP Wealth Management acting chief executive Jeff Ruscoe said it had delivered good outcomes for clients using its current investment manager, sister company AMP Capital Investors.

‘‘However, this change to a predominantly indextracking investment management approach is the right decision to ensure we are best placed to deliver longrun returns, further value for money and continue to support the financial wellbeing of our clients.’’

The change means instead of investment decisions being made by people, they will be driven by algorithms; the funds will track a particular index such as the NZX50 or S&P 500, investing in companies based on their weighting in the index.

Indextracking is used by other KiwiSaver managers including ASB, Simplicity, BNZ and SuperLife. — The New Zealand Herald