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Investment research house, Morningstar, has adapted its recently revamped Australian superannuation fund rating system to NZ with up to a dozen KiwiSaver schemes slated for qualitative reviews next year. Matt Olsen, Morningstar Australasia director of manager research ratings, told a NZ conference audience in Auckland last week that the now $135 billion KiwiSaver market offered a “growth opportunity” for the firm with talks underway with several schemes. Olsen said the move to upgrade the Morningstar research presence in NZ came after encouragement from Harbour Asset Management co-chief, Andrew Bascand, last year amid rising KiwiSaver balances and increasing competition for members. The KiwiSaver research effort was modelled on the Australian super ‘Medallist’ ratings service that Morningstar revised and expanded earlier this year, hiring Thomas Dutka and William Anglingdarma to boost the capability. Under the investment-focused approach, Morningstar will rate schemes based on the three “pillars” of “people, process and parent”. Investment process will account for half of the Morningstar KiwiSaver score while the fund management team and parent company strength contribute 25 per cent apiece to the rating. Initially, Olsen said the research would capture between 10 to 12 of the larger providers but may extend to the whole-of-market over time. The KiwiSaver ratings would be offered as part of the Morningstar paid research platform. While a handful of large institutional providers manage the bulk of KiwiSaver money, there is a long tail of mid-to-small players among the 30-odd firms vying for market share – with several of the challenger brands gaining traction over the last couple of years. The September quarter Morningstar KiwiSaver report, released last week to coincide with the Auckland event, shows the largest provider, ANZ, continued to lose ground relative to competitors even over the most recent three-month period. ANZ KiwiSaver reported $23 billion under management as at September 30, representing 17 per cent of the Morningstar dataset: at June 30 the bank-owned provider held 17.5 per cent market share and well down on its historic peak of more than 25 per cent a few years ago. The Morningstar KiwiSaver September numbers also show Milford growing its market share from 9.6 per cent at the half-year mark to 10.1 per cent three months later while Generate also added a few basis points to reach 6 per cent. Total assets under management in the not-quite-complete-coverage Morningstar KiwiSaver database hit just over $135 billion at the end of September. Despite the reasonable growth in funds under management, KiwiSaver remains miniscule compared to the A$4.2 trillion Australian super universe. A previous KiwiSaver research service offered by the Australian Lonsec SuperRatings business, for example, appears to have been quietly scuttled. But Morningstar is betting KiwiSaver might be large enough now to sustain a more concerted research effort from an Australian provider. Historically, NZ market has proven treacherous for Australian retail fund researchers, leaving behind a number of shipwrecks including van Eyk, Lonsec (where Olsen once worked) and even Morningstar itself, which scaled back its presence here in 2015 but retained a foothold as data-supplier and fund-rater from a distance.
