The $1.1 billion Prime Super has transformed its portfolio following the appointment of Access Capital Advisers as asset consultant.
Since Access came on board last June, Prime Super has culled 11 of its former active managers across Australian and international equities. Beta is now passively managed by index funds, while alpha is pursued through long-term infrastructure, private equity and hedge funds. Lachlan Baird, chief executive at Prime Super, said the new strategy (for which the fund had actively sought Access) aimed to deliver beta for a low price and increase the risk budget for uncorrelated alpha. Prime’s allocation to alternatives now sits at 25 per cent. Baird admitted that this was high for a super fund, but he believed it was the right thing to be doing. “It was part of our reason for going to tender [on the asset consultancy],” he said. The $1.1 billion dollar fund axed $340 million in Australian equity mandates with Investors Mutual Global Fund, JF Capital, Maple-Brown Abbott, Schroder, GMO long/short and Acorn Wholesale Micro Cap funds in favour of enhanced-index funds with Barclays Global Investors (BGI) and BlackRock Investment Management. In international equities, $250 million was cancelled with Bernstein Global Value Trust, Alliance Capital Growth Trust, Credit Suisse International Share Fund and Zurich Managed International Share Fund, in favour of passive mandates with BGI and State Street. The super fund has also ended its long relationship with custodian BNP Paribas Securities Services, appointing National Custodian Services last September.
There is one investment area where Insignia’s $180 billion super arm has not lost money for the past 17 years, which is what it calls the insurance-related investments. The alternatives strategy is gaining popularity among asset owners due to its diversification benefit, but Insignia’s super and asset management investment chief Dan Farmer warns it is a space where investors can suffer if they “stumble in without doing the homework”.
Darcy SongJanuary 23, 2025
