The country’s biggest single investor became the country’s biggest lender. But the annual report reveals that the fund is getting set with its investments, adopting both an opportunistic and a strategic approach, slowly, and in the process rewriting the text book for how an Australian super fund – most of which have similar liabilities profiles – should address its investment strategy. It’s not about following Access Capital’s client funds into alternatives. That was yesterday’s (good) news. This is about constructing a new type of portfolio which blends a bunch of lowly correlated assets, a lot of illiquids, a few interesting new investments, and some traditional assets in a way which will deliver an outcome. The Future Fund will probably reach its goal of $130 billion by 2020 with several years to spare.

AUSTRALIAN MANAGER S OUTSTRIP GLOBAL COUNTER PAR TS

The top 15 Australian funds managers saw their funds under management rise by an average of 19 per cent last calendar year, which was just over twice the growth rate for the rest of the world. Those 15 managers are the ones which made it into the top 500 in the world, by assets, according to the latest Watson Wyatt/Pensions & Investments annual survey.

The global growth rate of 9 per cent was the lowest it has been for five years and the largest of the global firms – the top 20 – grew by only 6 per cent, compared with a growth rate of 23 per cent in 2006. The top 20 managers still account for about 38 per cent of the US$69 trillion for the top 500 overall. The markets tend to drive FUM around the world but Australia has the obvious advantage of the Superannuation Guarantee underwriting the growth rate.

In times like these one has to wonder whether the industry as a whole is doing the right thing by Australian workers. The industry has done very well out of the SG. A lot of fund managers, planners and other service providers have made a lot of money because of the compulsory savings. So, when the markets deliver a once-in-a-generation shellacking it is only natural to expect some questions about the managers’ role in the process. Industry funds, for instance, have taken the opportunity to step up their campaign to have commissions banned from advice associated with SG super.

Funds and consultants are redoubling their efforts to squeeze fees. As Dick Elden, the former hedge fund of funds manager who now runs Lakeview Investment, an activist fund of funds, said last month: “almost every hedge fund in the world is now open”. The Watson Wyatt survey shows those managers which have attracted assets have offered liability-driven investment strategies and products, which have been very popular with defined benefit schemes in the US and UK, or have had diverse product ranges. Quant and value managers also did well in the survey period.