The $4.7 billion NSW Local Government Superannuation Scheme (LGS) has cut ties with its asset consultant of three years, InTech Investment Consulting, and appointed an international competitor, while the fund is looking to beef up its internal resources later this year to help meet reporting requirements under the UN Principles for Responsible Investment (PRI).
Peter Lambert, chief executive officer at LGS, said the ease of use of Mercer’s research tools by the fund’s own support staff was fundamental to the decision to hire the consultant.
“We’re utlising Mercer to provide investment support software… the manager research,” he said.
“At this stage we still have not yet decided on a firm to provide strategic asset allocation advice. We’ll look at that down the track but the reality is we did a full SAA review earlier this year so it’s unlikely that we’ll be requiring any further work on that for another year and a half at least.”
Lambert said Mercer clearly understood the model LGS wanted to use moving forward and the interaction between internal and external research and were able to tailor their service.
“We have a CIO supported by one investment analyst and we will be looking to appoint a second person later on in the year,” he said.
“That second person will probably play more of a role of collating information to ensure that we’re able to properly report to our board and our members how the scheme is discharging its obligations under the UN PRI.”
LGS’ relationship with InTech had been wound back over recent months to an “as suited basis”.
Brett Elvish, the former director of InTech, was commissioned to help the fund finalise its asset consulting arrangements following an earlier study by Russell Investments’ new head of investment consulting, Greg Liddell, who also recommended LGS increase its internal investment resources.
Lambert said the recent changes in ownership of InTech was not a deciding factor in the decision to move to Mercer, adding that the incumbent had “always provided a very good service”.
The rapid succession of ownership changes at InTech has contributed to a number of its implemented consulting clients tendering their arrangements, including the $410 million BOC Gases Superannuation Fund.
“We saw the change of ownership as a positive, as Morningstar is more likely to be aligned to the activities they’re undertaking for their clients but at the end of the day, Mercer came up with a better proposition, and you have to look forward,” Lambert said.