The Future Fund will not make the same mistakes as the NZ Superannuation fund, according to Paul Costello, Future Fund general manager, and former chief executive of the NZ fund.
The NZ Super fund, sometimes held up as a model for the Future Fund in particular and other large sophisticated investors in general, had an ‘over-engineered portfolio’, Costello told an AIST lunch in Melbourne last week. He said in NZ they began at ‘Chapter Two’, dealing with the asset allocation first ahead of appointing the right team and company structure. Costello told the packed lunch of about 300 industry participants that the NZ Super fund confused market and active risk and rushed the initial asset allocation decisions, which subsequently had to be revised. The Future Fund, which is yet to hire a chief investment officer, will also follow the trend led by QIC, AustralianSuper and VFMC and will build three teams under the chief investment officer – asset allocation, public markets and private markets. Costello said the search for a chief investment officer was progressing but that the fund would take its time until the right person was found. The Future Fund currently has 11 staff members, including a head of communications who joined last week, with a final team of 30 expected to be completed by late 2008. Active manager mandates are not expected to be allocated until late this year but the fund, which currently has $42 billion in funds under management (plus about $9 billion of Telstra shares) is on track to be invested this year. The custodian for the Future Fund is due to be announced within weeks.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
