ACC chief investment officer Nicholas Bagnall is calling it a day after spending more than a quarter of a century helping build the state-owned workplace insurer's investment portfolio to some $45 billion.
Bagnall will leave ACC this month to set up his own shop - Te Ahumairangi Investment Management - which will focus on international equities. ACC will sign on as a cornerstone customer.
"The work Nicholas has done for ACC and New Zealand has been outstanding. This is demonstrated by the ACC investment fund's performance exceeding benchmarks for 25 of the last 27 years," chair Paula Rebstock said in a statement.
"When Nicholas joined ACC in 1993, funds under management were less than $1 billion and the investment team was only five people. Now the investment team has 60 people across a range of portfolios and $45 billion in funds under management. Every $100 that ACC invested 27 years ago, has effectively grown to be worth more than $1,350 today."
He leaves at a time when the fund, like other institutional investors, grapples with low interest rates reducing returns available in bond markets. About 29 percent of the portfolio was in New Zealand bonds as at June 30, another 27 percent was in New Zealand inflation-indexed bonds, and 4 percent in global bonds. The rest was spread over domestic and international equities, unlisted investments, other instruments, and cash reserves.
ACC's annual report noted that it wasn't aware of any other large diversified fund that has matched its own run of outperformance, although it didn't envisage future returns to be as strong as in the past.
That success was partly explained by ACC's internal management which avoided "many of the distortions that are often inherent in traditional models of funds management." It had very low staff turnover and avoided large risks where its understanding was no greater than other investors, the annual report said.
It also recognised the risk posed by low interest rates in pushing up the cost of ACC's long-term claims liability, and said future investment income may not be enough to match the long-term growth in liabilities.
James Miller, an ACC director and chair of the investment committee, paid tribute to Bagnall's success and said the insurer secured "highly competitive rates" with Bagnall's new investment vehicle.
"Under Nicholas' leadership, the ACC investment team has been extremely successful in earning investment income that has significantly reduced the cost of levies Kiwis have had to pay for accident cover," Miller said.
ACC chief executive Scott Pickering said Paul Dyer has been appointed acting chief investment officer, but that the recruitment process for a new CIO hadn't been determined.
Dyer was previously chief investment officer at AMP Capital and the New Zealand Superannuation Fund, and had been a chief adviser to a finance minister, an economist at the Treasury, and a broker at Buttle Wilson.