The $65 billion Queensland Investment Corporation has finalised its ‘village of boutiques’ business strategy, which will see it exit traditional Australian equity management and most of its implemented strategies.
QIC’s chief executive, Doug McTaggart, said the restructure took place in an environment where many major investors like CalPERS were reviewing their approach to the separation of alpha and beta, and “winding back their alpha options and rethinking the relevance of global tactical asset allocation”.
With assistance from former Deutsche Asset Management chief executive Ken Licence, all of QIC’s internal investment divisions drew up business plans, and those deemed to be operating in an area of competitive advantage, with a good chance of becoming commercially successful in their own right, were retained.
McTaggart said QIC would therefore discontinue its Implemented International Equities, Implemented Absolute Return and Global Tactical Asset Allocation businesses, with head of alpha and implemented Jim Christensen to assist with the transfer and wind-down before mulling other possible roles within QIC. The lone implemented multimanager business to survive will be Implemented Australian Equities under Stuart Birkett, which has outperformed its ASX 200 benchmark by a net annualised 78 bps in the seven years since inception.
The ‘traditional’ low-risk active Australian equities business under Simon Hudson will also be closed down, and the current team structured into two specialised boutiques in Small Companies (led by Stuart Jordan) and Large Companies (led by Paul Banes). Hudson, who recently moved from Brisbane to Sydney, will assist with finalising the restructure and depart QIC by the end of the year.
The final line-up of boutiques, which will each have their own profit/loss statement and a remuneration design still being perfected by independent consultancies Oliver Wyman and Mercer Human Resources, will be Capital Markets (under Troy Rieck), Global Fixed Interest (Suusan Buckley), Australian Small Companies (Stuart Jordan), Australian Large Companies (Paul Barnes), Quantitative Management (Michiel Swaak), Global Real Estate (Rob Carter), Global Infrastructure (Ross Israel), Global Private Equity (Marcus Simpson), Implemented Australian Equities (Stuart Birkett) and Strategy (Adriaan Ryder).
Ryder’s boutique will be critical to QIC’s relationships with investors where more than one asset class is involved. It will liaise with investors on asset allocation and then assign mandates to underlying QIC boutiques accordingly.