The $2 billion TWU Super has reinforced its commitment to hedge funds by investing a further $100 million in the strategies, and flagging further mandates in 2010.
After redeeming a $70 million mandate from the hedge fund-of-funds (hedge FoF) offered by Warakirri in late 2008, TWU Super has put $60 million with UK hedge FoF manager Fauchier Partners, which is distributed in Australia by BNP Paribas Investment Partners.
A number of superannuation funds, such as REST Super, CareSuper, Media Super, PASL and LGS Super pulled out of the Warakirri hedge FoF in the months after it was forced to operate without a currency hedge for two weeks during the steep fall of the Australian dollar in 2008.
The fund, which was sub-advised by Chicago-based manager Mesirow, is no longer presented on Warakirri’s website as an available investment product.
TWU Super also took the opportunity to invest $40 million in GMO’s multi-strategy trust, an absolute return fund, when the manager opened the fund to new investors six months ago.
The mandates lift TWU Super’s hedge fund investments to 5 per cent of its total portfolio, and might be followed by further investments next year, “depending on how markets, and hedge fund and growth assets, go,” Andrew Killen, chief investment officer of the fund, said.
He said any further investments in hedge funds were likely to be made through hedge FoFs.
TWU Super’s investment committee picked Fauchier because of its risk controls and approach to markets in the months following October 2007, Killen said.
Before the investment with GMO, the fund had long sought a single-manager multi-strategy fund but its previous asset consultant, Mercer, was unable to recommend any of the available offerings.
“It’s only after GMO opened some new capacity were we able to get set.”
A team from JANA Investment Advisers, led by David Holston, now provides consulting services to the fund.