This helps to create a constructive and well-informed environment for the trustee board leading to informed decisions being made as the primary focus is on assessment of the key factors affecting the investment strategy and attainment of the fund’s investment objective. So it is not surprising then that we find smaller funds having a higher allocation to traditional asset classes and a limited appetite, or governance budget, for investment in alternative opportunities. Implementation and management of an investment strategy with limited complexity does place less demand on fund capacity in terms of resource, skill and operational requirements and controls the overall cost structure of the fund. Small funds are in the enviable position of being able to continue to benefit from the advantages that economies of scale provide as their FUM grows as they plan and grow towards their FUM “sweet spot”.

This approach has been adopted by Professional Associations Super, a Melbourne-based industry super fund managing assets of around $1.3 billion. An investments delegation matrix clearly sets out the roles and responsibilities of each primary stakeholder in setting and implementing the fund’s investment strategy. We have a dedicated investment team of two staff and a single ‘whole of fund’ asset consultant, with whom we work collaboratively to develop and manage the investment strategy policy guidelines. A key decision was to outsource management of the fund’s assets and focus resources internally on the investment strategy, which we believe will be the primary driver of investment performance and achieving members’ expectations.

With frequent investment committee and board meetings we accomplish approval and timely implementation of decisions; limiting opportunity costs that result in strong, and competitive, investment performance. Summ ary Small superannuation funds have the skills, processes and governance structures in place to achieve strong investment returns and provide for members’ financial futures. They are also in the desirable position of being able to continue to reap the benefits from improved economies of scale as their FUM grows. While large super funds are well positioned through their size to achieve the benefits of scale and better provide a range of services to members small can be beautiful too – and this part of the industry has begun to show its best features and natural advantages.