GESB has split its non-core assets into three new risk buckets as it adopts a more risk-aware approach to its investments, and has invested in private equity secondaries through its private markets program.
The $9 billion WA public sector fund has defined three risk buckets for alternative investments: a risk mitigating bucket, a low risk return-seeking bucket, and a high risk return-seeking bucket.
The move follows a continued restructuring of GESB’s asset allocation along a ‘core’ and ‘satellite’ theme, in which traditional asset class exposures will be accompanied by riskier satellite strategies.
Sharon Hicks, chief investment officer at the fund, said the fund has focused in the last 12 months on defining the “core asset allocation anchors” in the portfolio, and making sure their labels accurately reflect their risk/return and correlation profiles.
“We are making sure we classify those non-core assets along their appropriate risk profile,” she said.
“Those buckets have been defined, and we have defined an appropriate universe that would populate those buckets. It’s about not just blindly targeting return, but ensuring we think about risk first, rather than aggressive return-seeking as the primary objective.”
Hicks said the fund had participated in some secondary private equity transactions, with other allocations to unlisted assets to be made on an opportunistic basis.
“There are opportunities that we have already taken advantage of in our private equity program, we are actively refining and determining our approach and timing around our approach to unlisted property, and we’re making rapid progress on that front,” she said.
“I think we’ll see a more considered approach to infrastructure a little bit later this year or early next year. As much as there are obviously some opportunities out there at this point in time, our desire is to really make sure we fully understand the asset class first in terms of its features and profile before we make any commitment to that asset class.”
Meanwhile, two investment strategies joined the fund this month following the departure of Ralph Leib, a senior investment strategist who left GESB on August 11 to launch his own hedge fund.
Bill Dwyer, formerly manager, investments at the Non-Government Schools Superannuation Fund (NGS) in