Woes continue for GMO

GMO’s troubled Australian equities portfolio has suffered another $360 million in outflows as poor performance and an unstable team fail to instill investor confidence.

Industry superannuation fund REST terminated its $360 million mandate with GMO in May. GMO’s Australian Equities Trust returned -10.2 per cent in the year ending May (3.7 per cent below the index), yet Damian Hill, chief executive at REST, said concern over the stability within the Australian equities team was the primary reason for the decision. Since the withdrawal, GMO has bolstered its team with the hire of quant veteran Geoff Wells from Macquarie Investment Management, and Mark Thompson from State Street Global Advisors. Hill said that the fund would continue to monitor GMO in light of these appointments. The mandate with GMO accounted for 10 per cent of REST’s Australian equities portfolio, which will now be spread among three existing managers. Orion Asset Management and Paradice Investment Management (large caps) are to be topped up with $150 million and $100 million respectively, while the current global quant manager Arcadian Asset Management will receive its first Australian equities mandate from REST with $110 million. JANA Investment Advisers is REST’s asset consultant. Hill added that preliminary figures showed voluntary contributions over the past year had dropped in dollar terms, as would be expected given the surge prior to Better Super legislation 06/07, but the number of members making contributions had increased. “;Members are getting more involved as their balances increase, and the message about the benefits of co-contribution is starting to get through,”; Hill said.