Taking advantage of its increasing scale, Sunsuper has terminated a $1.3 billion international equities mandate with AMP Capital Investors, and split the redeemed money among five managers.
Now that the $15 billion super fund is big enough to drive investment deals with managers, Sunsuper has withdrawn its long-standing mandate with AMP Capital Investors’ core international equities fund, a multi-manager product in the Future Directions Funds (FDF) stable that’s co-advised by Mercer Investment Consulting, and allocated the money itself.
The mandate was a substantial piece of Sunsuper’s $3.1 billion international equities book. In its place, the fund has awarded five customised mandates to managers, giving it ownership of the individual securities, more control over tax events and clearer visibility of the effects of currency movements, David Hartley, chief investment officer at the fund, said.
He confirmed the $1.3 billion was invested in mandates of “roughly equal” size with the Edinburgh-based Baillie Gifford; London-based manager Taube Hodson Stonex Partners; and US managers GMO, Lazard and Tweedy, Browne.
Sunsuper entered the AMP Capital product when it was considerably smaller than its current $15 billion, so it could club together with other investors to achieve greater scale. Its move out of the product illustrates the greater control that super funds can exercise as they grow larger.
“When we didn’t have much money, we were pooling ourselves with [AMP Capital] and Mercer to get benefits of scale,” Hartley said.
“Now we’re a lot bigger than what we were, and are getting a more tailored approach.”
Hartley was “quite happy” with the outcomes of the investment with AMP Capital. In allocating the redeemed money, he Joshua Bloom, Sunsuper’s international equities portfolio manager, chose two mainstays in the AMP Capital product – Baillie Gifford and Taube Hodson Stonex Partners.
The big shift does not fully extract Sunsuper from FDF international equity products: it still invests in the multi-manager’s emerging markets and ‘extended markets’ funds, the latter of which includes more diverse strategies, such as small-caps, and greater geographical range.
But these investments were smaller than the $1.3 billion core international equities mandate, so that “the rationale for having these pooled still exists,” Hartley said. “They’re smaller and a bit more esoteric.”
Hartley, who represented Sunsuper on the AMP Capital investment committee, stepped down from this position when the fund terminated the mandate. It was his second posting to the committee, following his time there while CIO of Mercer from 2000 to 2003.