The $5 billion Local Government Superannuation Scheme (LGSS) has plucked a three-person team from services provider FuturePlus, which it half-owns, to manage its $580 million domestic property portfolio.
After terminating its direct domestic property mandate with FuturePlus, LGSS recruited portfolio manager Brian Churchill and two of his three team members, Andrew Kim and Barbara Ramston, from the manager to LGSS to oversee the same portfolio.
“We just terminated the agreement and offered certain people in the team to come across and run it for us. If they didn’t accept the offer, we would have searched externally,” Peter Lambert, LGSS chief executive, said.
“We’re now able to manage the portfolio more cheaply.”
The fund also terminated a $150 million offshore listed property mandate with another linked services provider, Chifley Financial Services, which is owned, in equal thirds, by LGSS, Unions NSW and the Energy Industry Superannuation Scheme.
Lambert said the outcomes of its investment in the Chifley trust were unsatisfying.
“We went into the mandate on the basis that Chifley would attract other clients and aggregate money to get cheaper fees. That hasn’t happened.”
Chifley invested the money in La Salle Investment Management and Perpetual. LGSS has allocated the redeemed capital to AMP Capital Brookfield, the joint venture between AMP Capital Investors and US shop Brookfield Invest Management, which invests in global listed property and infrastructure.
The redemption sees LGSS distance itself further from Chifley. In the past year, it has culled hedge fund-of-fund, overseas small-cap and listed property mandates with Chifley, in addition to a ‘special share’ arrangement, which gave it access to AllianceBernstein and quant manager AQR, Lambert said.
The terminations followed the appointment of LGSS’ first chief investment officer, Craig Turnbull.
“We’re gradually going through these portfolios and reassessing our options.”