Kiwi cousins require a commitment

As a destination for Australian funds management businesses, New Zealand has a mixed reputation. While Australian firms, through their bank-owned subsidiaries, have a stranglehold on NZ’s financial services, including funds management, it’s a tougher gig for stand-alone managers.

One Australian firm, global shares manager Magellan Financial Group, has made the effort. Magellan head of distribution Frank Casarotti says the NZ market does require commitment.

Australian fund managers have a “fly in, fly out” reputation in NZ, treating it as a destination to be serviced once or twice a year.

“We have a full-time person on the ground in New Zealand,” Casarotti says. “Advisers appreciate that.”

He says Magellan has raised about $85 million from NZ investors (it takes in close to $60 million each month in Australia).

While some of the regulatory hassles have diminished since the introduction of the Trans-Tasman Mutual Recognition of Securities agreement in 2008, which essentially permits the same prospectus to be used in both jurisdictions, Casarotti says there’s still an additional “partly cumbersome” layer of bureaucracy to contend with in NZ.

Ardea Investment Management, an Australian boutique fixed-income manager specialising in inflation-linked bonds, also sees value in the NZ market.

Ardea principal Tamar Hamlyn, says the group established a full-time office in Auckland trading as an NZ corporate entity about a year ago, aiming to build up an institutional client base.

“Large players see New Zealand as a very small part of their total business and offer over-the-counter solutions,” Hamlyn says. “But because we’re small we can deliver customised solutions.”

While Ardea is yet to score an NZ client, Hamlyn says the establishment effort will pay off in time.

“New Zealand’s financial market operations are similar to Australia’s,” he says. “It’s close to home in time zone and physically. The risks of going there are manageable.”

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