TWU alternatives revolution to continue with global unlisted property

The $1.8 billion TWU Super is searching for a global unlisted property manager, as it continues its program of diversifying alpha sources with the award of global listed infrastructure, opportunistic property and Australian equity long/short mandates.

Chief investment officer Andrew Killen said the search, which would be assisted by asset consultant Mercer, would be relatively simple as few global unlisted property products were available locally. One is offered by Russell Investment Group, whose global REIT fund has had an allocation from TWU Super for the past 12 months. Meetings of TWU Super’s investment committee and board last week approved two new mandates – a 3 per cent exposure to Lazard Asset Management’s 10-month old global listed infrastructure fund, and a $25 million commitment to Eureka Funds Management’s second opportunistic property fund – as well as an increased exposure to Warakirri’s Mesirow-managed global fund of hedge funds, from 3 per cent to 5 per cent. Killen said the Lazard mandate would fast-track TWU Super reaching the target 8 per cent infrastructure allocation in its default balanced fund. Its real exposure is currently less than 2 per cent. The Eureka mandate, meanwhile, is a pure property development play and as such will not form part of TWU Super’s property portfolio, but instead go toward its ‘unlisted equity’ exposure of 5 per cent. The new mandates follow hot on the heels of a fixed interest overhaul in August, which saw 3 per cent of the total fund allocated to a new Goldman Sachs JBWere Australian fixed interest trust, which is able to ‘alpha transport’ into global bond opportunities. The same allocation has been awarded to Loomis Sayles’ unusual Credit Opportunities Fund, whose only two possible asset allocation are 80 per cent bank loans/20 per cent high yield debt, or the other way around. “It’s about interest rate management for us,” Killen said of the Loomis Sayles fund. “We like it because [the bank loans exposure] gives us protection if the bond markets are looking crappy.” A new Invesco global bond mandate is awaiting funding, because of delays in liquidating a BT-marketed BlackRock global bond trust, in which TWU Super is the last remaining investor. Just before the fixed interest overhaul, $95 million was awarded to Merrill Lynch Investment Management’s Australian equity long/short fund, the first mandate of its kind for TWU Super, while $70 million was assigned to Alliance Bernstein’s fully hedged global equity trust.