The $1.4 billion Asset Super has terminated a Challenger domestic shares mandate, reducing its number of Aussie equities managers from six to five, and farewelled a State Street Global Advisors fixed income mandate as it rationalises that asset class under a single manager.
The fund terminated a $120 million Australian fixed income mandate with SSgA, in the name of consolidation under Barclays Global Investors, and recently approved Mercer’s recommendation to transition a $50 million Australian equity brief away from Challenger.
The $50 million Aussie equity mandate has been redistributed among existing managers Tyndall, Quest, Integrity and Alleron, with the transition completed by Mercer Sentinel in early August.
John Paul, chief executive of Asset Super, said the fund had taken Mercer’s advice to review the range of managers in the domestic equities portfolio to ensure they were best of breed, and potentially consolidate the portfolio.
“We had a bit of a tilt towards value and the view from Mercers was that we should be more balanced in having a combination of growth and value, and at the same time look at rationalisation of the number,” he said.
The fund’s domestic fixed income portfolio is now managed predominantly by BGI, with a “small, residual amount with [Challenger-backed boutique] Kapstream”, Paul said.
Changes were made to the fund’s cash investments, international equities, international fixed interest and alternative investment portfolios before the end of last financial year as part of the investment restructuring process.
Paul said this included “a move away from a single sovereign bond approach for international fixed interest to a multi-faceted portfolio made up of four bond managers”, with the opportunity for diversification across the portfolio.
The fund has also invested $11 million in direct unlisted property via Lend Lease, and switched its cash management from a 50/50 split between ING and Perpetual to Kapstream and Colonial.
“ING we were able to redeem just before the end of the financial year, and the redemption involved an in specie transfer,” Paul said, referring to some of ING’s ‘enhanced’ cash assets which became less liquid during the global financial crisis.
“Kapstream hold the entire portfolio. By taking it as in specie we now have control of those investments and can decide whether we want to keep them or sell them. We believe we have good investments but if we had to trade they wouldn’t get the fair value they deserve, so rather than sell at a depressed price we are taking advantage of the good yield on the portfolio and going forward that will give us good performance.”