The $2.5 billion-plus Energy Industries Superannuation Scheme (EISS) has just signed up a new asset consultant to replace Russell Investments, with a review of global equities its first order of business after two more sackings in the asset class.
Mercer Investment Consulting will provide strategic investment advice into the future, with principal consultants to EISS earmarked as Ross Cartwright, Bruce Gregor and Mercer IC boss, Simon Eagleton.
The general manager of investments at EISS service provider FuturePlus, Michael Block, said Mercer’s offering was flexible, suited EISS’ long-term aspirations and brought with it certain economis of scale.
“Our scheme actuary is Mercer, we used the ‘GIMD’ [Mercer’s global investment manager database] and employ Mercer’s dynamic asset allocation service, so if you’re getting three of your four major investment inputs from the one place, you might as well get four, especially since they’re all on the same systems and sitting in the same offices,” Block said.
An early responsibility for the new consultants is to review EISS’ global equities portfolio, which accounts for 40 per cent of the fund’s assets, and will shortly be parked entirely in passive management following the termination of a circa $100 million mandate with growth house Marvin & Palmer.
EISS earlier sacked AllianceBernstein, and has also done away with a State Street Global Advisors passive enhanced mandate.
When the money is withdrawn from Marvin & Palmer and SSgA, Block said it would either be equitised or placed physically with Barclays Global Advisors (which already indexes around one-third of the portfolio), pending a review of the portfolio.
Meanwhile, only three active Australian equities managers are left standing at EISS, following the termination of a mandate with Michael Triguboff’s MIR Investment Management. Fortis, BT Investment Management and Quest share the pie with a 50 per cent passive component managed by Barclays, a level of index-tracking that Block said he was comfotrable with into the future, for “efficiency reasons”.
He foreshadowed the international equities portfolio would eventually have a higher active presence.
On the semiotic front, Block has made another change to the asset class definitions used by EISS. Following on from his abandonment of LPTs as a discrete asset class (Block figures that broad-market Aussie equity managers can already buy them), the EISS will henceforth consider credit as a ‘growth’ asset. This move, which recognises the equity risk premium as the main driver of credit returns, comes too late for rescinded mandates with PIMCO and Loomis Sayles.