Australia’s two largest government-owned funds managers, the Queensland Investment Corporation (QIC) and Victorian Funds Management Corporation (VFMC), have revealed new structures they claim will boost their ability to outperform.
Chief executive of the $70 billion QIC, Doug McTaggart, said the manager had already been separating alpha and beta, but until now this had been expressed through several asset class silos all reporting through to him. With the creation of QIC Asset Management under Brad Holzberger, QIC Private Capital under himself and a separate Investment Services division providing infrastructure and support, McTaggart said more like-minded people were now talking to each other. “It’s helpful to have the credit guys talking to the equity guys and the infrastructure guys, sharing information on the relationships between what they are doing,”
McTaggart said. QIC’s Brisbane headquarters on Eagle Street are currently undergoing a refurbishment to better physically reflect the new structure based around the three discrete business lines. Meanwhile, CEO of the $38 billion VFMC, Syd Bone, said outgoing chief investment officer Leo De Bever had delivered the organisation a purer investment culture, despite serving only half his three-year contract. “He was the right person at the right time to sort out our governance model, which we needed to make global best practice if we were to become a credible centre for investment excellence,” Bone said.
VFMC’s board is now focussed strictly on general strategy and due diligence, while management has been empowered to invest. “The payback for the board is that they get a lot more detailed reporting on the investment activity,” Bone said.
Day-to-day investment decisions are handled by a new Total Risk Allocation Committee (or ‘TRAC’), made up of each asset class head and implementation head Norm Sinclair. Large investment ideas such as new managers, or major shifts in asset allocation, need to go to the executive investment committee for sign-off.
This committee includes the chief executive officer, chief investment officer, the chief operating officer, the head of legal and the head of risk management.
