The former head of absolute return funds at Everest Financial Group, Steve McKenna, will soon resurface at an $8 billion superannuation fund to implement its credit and alternative investment programs.
McKenna will join Western Australia’s GESB as head of credit and alternatives in early July, and will play pivotal roles in determining the fund’s first allocations to hedge funds and restructuring its asset allocation policies, Sharon Hicks, chief investment officer, said.
The fund had monitored the product pitches and performance of hedge funds during the last bull market and into the downturn, and was assessing which strategies and managers were the better performers.
“We’ve kept our powder dry as we waited to see which strategies would deliver,” Hicks said.
In the past six months Hicks has taken advantage of retrenchments in financial institutions to search for appropriate candidates to join the public sector fund’s internal investment team as it plans to restructure its asset allocation along a ‘core’ and ‘satellite’ theme, in which traditional asset class exposures would be accompanied by riskier satellite strategies.
“We aim to determine what is core in the traditional asset classes, and then invest opportunistically in the next areas in which we want to establish an exposure.”
For example, the fixed interest portfolio would hold only sovereign and investment-grade bonds, while more risky credit instruments would be placed in the alternatives bucket.
The internal investment team at GESB currently has a headcount of five, which includes Hicks, two senior investment strategists and two investment analysts.
In the near future, the fund would aim to ideally employ up to four senior investment strategists or portfolio specialists, supported by analysts, Hicks said.
“You take investment opportunities where they exist. If the risk/return profiles determine that they are in credit, currency or macro hedge funds we need to have the resources in the team to prioritise them and introduce the appropriate strategies.”
She said the financial crisis had produced a “depth of talent at the right price” that had not been seen in recent years.