Bucking the trend for super funds to access absolute returns via offshore hedge fund-of-funds, Telstra Super has seeded a Melbourne-based Australian equity long/short manager.
The $11 billion scheme has allocated what is understood to be at least $20 million to the LG Investment Group’s wholesale Absolute Return Fund. LGI was founded in mid-2006 by Terry Gray, previously a director of corporate finance and equities at Grange Securities, chief investment officer at Allianz Equity Management and head of equities at ANZ Funds Management. LGI’s Absolute Return Fund was seeded last October out of Telstra Super’s Australian equity portfolio under Dan Farmer, rather than the alternatives portfolio under Nicole Connolly. The fund’s alternatives portfolio is a cornerstone investor in the Grosvenor hedge fund-of-funds, represented in Australia by BT. Telstra Super’s decision to seed LGI’s fund has been lauded by the local hedge fund community, which to date has been forced to look mostly offshore for investors. LGI’s Gray has been unavailable for comment, however according to LGI’s website the Absolute Return Fund uses a combination of Australian equities, equity-based derivatives, cash and managed investment schemes. Its stated fund objectives are high tax-effective yield, exposure to growth, capital preservation sought in extended market and bearish or weak market environments, and lower correlation to equities than conventional funds.
Future Fund chief investment officer Ben Samild said that FY24 has been a great year for alpha creation, thanks to strong returns in equities and, unusually, across multiple hedge fund strategies all at the same time. He reflected the past few years have been “a difficult time to be an asset owner and to generate positive returns for risk assets” but the Future Fund is tracking well of its long-term mandate.
Simon Hoyle and Darcy SongSeptember 4, 2024
