By David Chaplin

Copyright investmentnews

The Auckland Future Fund (AFF) will invest up to 20 per cent in alternative investments, according to draft guidelines published last week that also confirm Adminis as custodian.

As flagged last month, Adminis (which outsources global assets to BNP Paribas) was the pick to take on the AFF custody and administration role following the earlier appointment of Vontobel as investment manager for the $1.3 billion Auckland Council-owned perpetual fund.

The AFF board includes Christopher Swasbrook (chair) as well as Craig Stobo and David Callanan.

Vontobel was selected after a lengthy search for a global manager to run the AFF money but the draft statement of investment policy and objectives (SIPO) put before Council last week adds more detail to the proposed strategy.

Under the SIPO terms, the fund will have a target weight to international equities of 72 per cent (including 3 per cent in emerging market shares), 16 per cent in global bonds and 12 per cent in alternatives.

However, the SIPO includes a dynamic asset allocation range that could see, for instance, the alternatives bucket hold between zero and 20 per cent of the overall portfolio.

Alternative asset options also cover the gamut from private market debt and equity staples as well as real estate, infrastructure, commodities, precious metals, hedge funds and catastrophe bonds.

The AFF has a long-term annualised target return of 7.24 per cent after fees and costs with an expected payout to the Auckland Council amounting to 5.24 per cent of the portfolio every year.

Despite its tax-exempt status, the fund will also “try to use tax-efficient investment structures”, the SIPO says.

Auckland Council approved the SIPO without further amendments, opening the way for the fund to begin investing.

Māpua Wealth serves as independent investment adviser to the AFF.

And Māpua added another client to its roster with i-Select signing on last week.

Previously, the roughly $400 million UK pension transfer specialist used Mercer and independent adviser, Andrew Johnson, for investment consulting.

The manager also appointed Mercer as underlying manager for its diversified portfolio investment entity (PIE) fund scheme launched in 2019. Headquartered in Ashburton, i-Select also offers a longer-running multi-choice UK pension scheme as well as about 20 individualised funds.

Former Smart(shares) chief, Hugh Stevens, bought i-Select in December 2023. Since the sale, i-Select has appointed Adminis for custody and admin to replace FNZ, Hobson Wealth and Apex in various roles.

While i-Select is distributed through financial advisers, the manager retains responsibility for the underlying investment menu.

Also last week, Milford Asset Management formally opened its seventh office around NZ in Havelock North.

Milford joins a number of wealth management firms clustered in the well-to-do Hawke’s Bay hamlet including JBWere, Forsyth Barr, Craigs Investment Partners and Pie Funds.

Now boasting more than $30 billion under management, Milford has expanded its advisory presence over the last few years from the Auckland HQ to outposts in Wānaka, Christchurch, Wellington, Cambridge and Tauranga with Whangārei scheduled to open soon.

Milford hired ex ANZ financial adviser, Michelle Roberts, late last year to front the Havelock North office, which is reportedly seeing brisk business.

In a release, Milford said it expects the Havelock staff numbers to “grow quickly” with one new adviser already on board.

The region saw another significant wealth management move earlier this month when Craigs purchased the well-established boutique outfit, Somerset Smith Partners.

Including the new buy, Craigs has 10 advisers across its Napier and Havelock North locations. Nationally, the group reports more than 200 advisers and $35 billion in funds under management.

Founded as a traditional stockbroking house in 1934, Somerset Smith merged in 1983 with another local share advisory firm, Bruce & Dalton: the seven Somerset Smith advisers (including three partners) based in Havelock North and Napier will join the Craigs crew.

US private equity firm, TA Associates, bought half of Craigs last December in a move expected to spur further advice firm acquisitions across the country.