The $4.7 billion NSW Local Government Superannuation Scheme (LGSS) has terminated two mandates with active Australian equity managers and awarded a new mandate worth $110 million to a Sydney-based active boutique in the final stage of the restructure of its domestic equities portfolio.
LGSS terminated a $164 million mandate with Chicago-based value manager LSV and a $70 million mandate with Tim Ryan’s Orion Asset Management, splitting the money between Greg Matthews’ Independent Asset Management ($110 million), BT Investment Management ($58 million) and Fortis Investments ($63 million).
Peter Lambert, chief executive officer of LGSS, said the number of active Australian equities managers had been reduced from “seven or eight” to four, with Colonial First State retained to manage a small companies mandate worth 5 per cent of the domestic equities portfolio.
“We’ve appointed Independent to a $110 million mandate and allocated some additional monies to Fortis and BT,” he said.
“[The aim was] to finalise the previous structure agreed to where we’d have up to approximately 50 per cent of our investments in passive and the remaining with a small number of active managers.
“Both Fortis and BT have performed very well within the style space that we were looking to maintain and Independent is a smaller high conviction-type manager, enabling us to get our desired exposures with a limited stock redundancy.”
Craig Turnbull, chief investment officer of the fund, said on the back of the restructure BT now manages 18 per cent of the Australian equities portfolio, Fortis manages 16 per cent and Independent 11 per cent.
In June, LGSS terminated active Aussie equity mandates with BlackRock and Barclays Global Investors (BGI), and put the $540 million of redeemed capital into an ASX200 index fund run by BGI.
At the time, Lambert said fewer active managers in the portfolio would result in less overlap among managers’ investment positions and potentially create a higher tracking error.
Earlier this year the fund also implemented a strategic overweight to beta in its international equities portfolio, assigning Vanguard to manage 40 per cent of the book, amounting to $300 million.