Zurich mixes up new blend portfolios

Zurich Financial Services Australia has tweaked its blended series of funds by adding Barclays Global Investors to give five of its blended portfolios a small component of index management.

The manager selection process for the blended funds is conducted by van Eyk Research through its Blueprint Series and the decision by van Eyk to allocate the Barclay Global Investors Fission International Equity Fund with 15 per cent of the Blueprint International Shares Portfolio, equated to 11.25 per cent of the total Zurich International Share Blended portfolio.

The percentage discrepancy is due to Zurich, unlike van Eyk, having a 25 per cent allocation to itself.

Four other managers had their allocations reduced to accommodate Barclays, with these managers having their respective allocations reduced by just under 4 per cent by van Eyk.

For the five Zurich funds affected this resulted in Alliance Capital Management Australia having its allocation reduced to 20.62 per cent, Capital International moving to 15 per cent, GMO Australia falling to 9.38 per cent and Wellington Capital Management Company seeing its share slip to 18.75 per cent.

“The rationale for this allocation is that market PE [price to earnings] ratios are compressed, making the risk reward trade off for active management limited at present,” Zurich Australia investment specialist, Peter Walsh said.

The funds affected are the Zurich Blended Series International Share, Managed Stable, Balanced, Managed Growth and Priority Growth Funds.

“A small passive allocation reduces the risk of active management while still giving a market exposure. The passive component has also introduced a tracking error level which enables better management of the risk in the portfolio,” Walsh said.