The $16 billion Sunsuper has allocated an additional $200 million to emerging market equities, but is achieving the exposure through exchange-traded funds selected by its transition manager, while it investigates whether any active managers “make sense”, according to chief investment officer David Hartley.
The multi-industry fund has maintained its investment with the AMP Future Directions multimanager emerging markets vehicle, and the $200 million boost takes the emerging markets component of its offshore equity allocation to approximately 20 per cent, Hartley said.
Accessing emerging markets through ETFs “is working for us for now”, Hartley said, explaining that the transition manager it was using for this deal – Russell Investments – had been instructed to buy “whatever ETFs look best on the day”.
Using ETFs was healthy for the fund’s published investment fees, Hartley noted, because they didn’t have to be included.
“That really indicates the stupidity of the rules around reporting costs,” he said. The buy/sell spreads on an emerging markets ETF were also lower than trading in the real underlying shares, he noted.
Nevertheless, a search for active emerging markets managers is underway, under the direction of international equities portfolio manager Josh Bloom.