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Exclusive: Harbour Asset Management wins $225 million in new mandates

Tuesday 9th February 2010

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Start-up fund manager Harbour Asset Management is out of the blocks and running with three mandates worth $225 million awarded in January, just weeks after its formation by the team that managed Alliance Bernstein's former New Zealand operation.

Harbour’s managing director Andrew Bascand told BusinessWire the firm had won a substantial mandate from the Government Superannuation Fund, another of around $30 million from National Provident Fund, and one further mandate from a global investment fund that he declined to identify.

"These mandates are good to have, because of the due diligence that the boards went through to approve us,” he said. “It's a very rigorous process, and by no means a certain outcome at all."

After establishing appropriate governance and systems over the New Year period, Harbour is now in "pitch mode," he said.

The new funds management business is made up of the old AllianceBernstein team, which helped put the AllianceBernstein Australasian High Growth fund at the top of the league table for managing New Zealand shares in 2009, with 28.5% returns, and top over five years, with 6.9% annual returns.

Harbour operates at arm’s length from broking house First NZ Capital, which helped establish it when AllianceBernstein withdrew to Sydney late last year.

In a show of its independence, Harbour has appointed Trustees Executors as its independent settlements agent and will move soon from its base in First NZ Capital's offices in Wellington to new premises. It is using the Bloomberg Asset Management system, chosen as "best practice" in trading, portfolio analysis, compliance and client reporting.

Harbour is fully funded by First NZ Capital, which the new firm chose from among "13 genuine offers from a range of financial institutions," said Bascand.

"In a way it doesn't matter who owns the equity in the business," he said. "Running a successful fund manager is about people and ethics and good systems. Having independent board members Graeme Wong and Wayne Stetchman adds an important oversight to the business.”

As a fund manager in the New Zealand market, it was necessary to take at least a six-to-nine-month view on any investment, and to have a rigorous system in place for evaluating both the good and the bad times, he said.

The firm has a three-step assessment process that constantly ranks every stock on a buy/hold/sell basis, six quantitative factors including return on equity, earnings momentum and balance sheet strength, and a set of macro-economic indicators.

Last year, the state of the world economy was the biggest focus, while this year's focus would swing more to asset quality, said Bascand.  With major economies likely to start normalising their monetary policy stance and New Zealand interest rates set to rise during the year, Harbour is being particularly vigilant of interest-sensitive stocks in the utilities and property sectors.

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