NGS Super hires start-up ahead of manager cull

Industry fund NGS Super has awarded Australian equities start-up Integrity Investment Management an $85 million mandate, but will progressively decrease its number of local share managers following a review.

The win is one of four mandates secured by Integrity since it was established in September by managing director Paul Fiani and a team of ex-UBS Global Asset Management staff. While the other three clients remain unnamed, Fiani confirmed total funds under management for the Integrity Australian Share Fund is now just over $400 million. The $3 billion NGS Super mandated 8 per cent of its Australian equities portfolio to Integrity. NGS chief executive Colin McGuiness said there would be some fund manager casualties as a result of the asset class review but would not specify which managers at this stage of the transition. Integrity was attractive to NGS largely because of its “start-up” status, albeit with an experienced investment team, according to McGuiness. NGS was looking to “get in on the ground floor” with a couple of managers that were not constrained by large funds under management and were not reaching their fund capacity. “We were trying to ensure that future cash flows could be placed. A number of our managers were getting to the top end of funds that they could take, within the structure of the funds they’d set up originally, so that’s been no small reason for the decision,” McGuiness said. While NGS Super had not previously been a client of Fiani and his colleagues until now, McGuiness said the team had a recognised record which was also a factor in their mandate win. NGS Super had embarked on a rotational review across all its asset classes. Australian equities was the first sector as it represents the largest proportion – 34 per cent – of the total fund, McGuiness said. The fund is working with asset consultant JANA to decrease its overall number of external managers, recognising that it may carry some baggage from mergers with two super funds in the last couple of years. “We took on the mergers [Independent School Superannuation Trust in 2005, South Australian Catholic Fund in 2006] on the basis that we would take the existing manager lineup and then at some later stage shake them all down,” McGuiness said. “Some of the smaller managers we did reconcile at the time, but we probably do have too many managers for the spaces we have required and in the review process we tried to build a structure that gives us the diversity of styles we seek in the proportion which we think they should be.”