The $12.2 billion Funds SA has rejigged its strategic weightings to equities and credit on the back of an extensive review conducted earlier this year and appointed a well-known ex-Russell and Intech consultant to its board.
Richard Smith, chief executive officer of the South Australian government-owned corporation which manages the investments of Super SA said the review resulted in a small decrease in Funds SA’s strategic equities allocation and a small increase in its credit allocation.
In the balanced fund, equities were reduced by about 7 per cent and the credit allocation rose by 2 per cent.
The strategic allocation for the fund includes: 5 per cent cash, 7 per cent fixed income, 15 per cent inflation-linked securities, 10 per cent credit, 8 per cent property, 27 per cent Australian equities, 22 per cent international equities and 6 per cent growth alternatives.
“We’re not that far away from our strategic position,” Smith said.
“At the moment we’d be overweight credit and still a little underweight equities but not massively so. We simply saw the risk-return trade-off between equities and credit favoured credit, especially the investment grade part of the credit market and that in the prospective environment of perhaps lower economic growth that credit might offer better opportunities than the overall equities market.”
No new mandates were funded on the back of the review, with the extra funding going to Funds SA’s existing managers.
Aberdeen Asset Management, Macquarie Investment Management, AMP, GMO, Loomis Sayles and PIMCO are the manager’s credit managers, while on the equities side, balanced equity management is handled by Barclays Global Investors, Bernstein Australian Value, Goldman Sachs JBWere, Orion Asset Management, Perennial Growth and Perennial Value Management.
Meanwhile, David McMahon, formerly chief executive of State Super, who has held positions as director of consulting at Russell Investments and head of asset consulting at Intech, joined the Funds SA board of directors in December.
McMahon was also once director of policy for the NSW government where he advised the minister on superannuation policy.
He replaced Julie Brennan, who Smith said had not sought renomination after her term expired.
“David has joined the board in order to provide his depth of investment expertise and experience to our decision-making,” Smith said.
The seven-member board is the ultimate
governance authority for Funds SA. Its prime responsibility is to govern the
organisation and make key investment decisions.