All Star Funds, the Professional Investment Services-backed multi-manager, may become the first to offer the Australian retail market an international equities fund with actively managed currency overlaid.
Kate Mulligan, All Star’s managing director, told the Russell Investment Group annual client conference in Cairns last week that it was a “cop-out” to leave the currency decision to the financial adviser because of the complexity of the decision. “We might be the first retail product to do it (provide active currency). “So, you’ll be hearing from us,” she said from the floor to Jim Coleman, a senior vice president of currency manager Pareto, who was one of the speakers in a session on currency. Mulligan said later that the next manager to be appointed to the All Star line-up was likely to be an international equities manager. She had been speaking with several candidates, she said. Meanwhile, the firm’s initial retail offering, for the Australian equities boutique Independent Asset Management, raised $25 million in the first three weeks of its PDS being available. All Star’s other manager signed to date is Kaplan Funds Management. Mulligan said the firm was being aggressive on its fee structure and therefore expected to attract significant investment flows from outside the PIS network as well as from within. The retail funds which do pay recognition to currency so far have only provided for static or dynamic hedging – with the adviser left to decide how much to hedge the $A – rather than full active management across the portfolio. Jim Pereira, a research associate at Russell, told the conference that “currency is tough – everyone has an opinion on the $A but only a few people understand currency and even fewer can take that knowledge and extract value”. But the decision to hedge or not could have a major impact on a portfolio. For instance, a hedge international equities portfolio (indexed) would have returned 14.5 per cent a year over the past five years, while an unhedged one would have returned only 4.7 per cent a year.
The role of IFM Investors in arranging a visit by a delegation of Australian super funds to the US last month gives a pointer to the scale of the longer-term ambitions of the global super-fund-owned asset manager, and a recent investment in the manager by the UK pension fund NEST is designed to give it even greater clout. IFM chair Cath Bowtell tells Investment Magazine the manager aims to be a partner to governments around the world as they seek capital to build critical infrastructure.
Glenda KorporaalMarch 21, 2025
