Wilhelm Harnisch, an employer representative Cbus trustee, also said that Global Dialogue could benefit from the inclusion of other types of funds, such as insurance funds, for co-investment discussions or other opportunities. Louise Davidson, manager of sustainability projects for Industry Funds Management, said that it was possible to establish an international framework for ongoing dialogue to fill “gaps” where fund co-operation could be used to advance issues such as funds manager costs and trustee education. Speaking for her discussion group of fund representatives, she said: “We also like the idea of internships but we think that funds should also promote greater engagement with academia, perhaps through the establishment of some research grants.”

Some Australian funds were also taken with the engagement by US public sector funds with their members. CalPERS, for instance, holds an annual ‘retirement expo’ information event for members designed to encourage more involvement and increased savings. Other big funds, such as the TIAA-CREF medical industry group of funds, hold annual elections for the board among its 3.2 million members, and an annual meeting. This sort of member involvement is a vexed issue for Australian funds, where members do not usually even get to vote on something as major as a fund merger, let alone director appointments.

However, Hye-Won Choi, the head of corporate governance for TIAA-CREF, told the meeting that pension funds needed to get their own governance house in order before they told companies how to better govern the businesses in which they invest. Gerard Noonan, the chair of Media Super, the recently merged JUST Super and Print Super industry fund, probably spoke for the majority when he said that “open board meetings or fake stakeholder democracy” was not practical, however, there was probably merit in systematic polling of member attitudes on investment and administration issues. The challenge for funds managers and perhaps placement agencies and asset consultants in all this is that with more co-operation between funds, especially smaller Australian funds linking with larger ones either in Australia or overseas, they will need to redefine their roles in co-investment deals.

Managers, rather than investment banks, are more likely to be successful partners for funds because of their longer-term, relationship-orientated cultures. But they, too, need to address the grievances that funds have, particularly around their fees and charges. Garry Weaven, the chair of Industry Funds Management (IFM), spelled out these concerns at the conference, as he has done many times before. While IFM is also a funds management firm, with its own fees and charges, the concerns voiced are nevertheless real. Weaven said that there were often conflicts of interest in private equity or infrastructure offerings where a manager was able to extract “huge fees” outside its funds management contract from advisory or other services. Also, where a manager holds the asset in a vehicle, and it is impossible for the manager to be dislodged, they may be motivated more by growing the assets of the vehicle than earning an internal rate of return (IRR), he added. Weaven predicted funds would continue to increase their allocations to unlisted markets, partly because of the “substantial cost” involved in running listed vehicles, including the consideration of insider trading.