The $8.3 billion industry fund, HostPlus, has closed down single-manager member investment choice options with AllianceBernstein and Bridgewater Associates – but for very different reasons.
Chief investment officer at HostPlus, Sam Sicilia, said it had stuck with AllianceBernstein through two years of dismal post-GFC performance, even as its growth-value blend approach was terminated by many other Australian clients.
“The performance had been less than satisfactory, but history tells you that managers of that calibre are likely to rebound,” he said.
However when one of the two portfolio managers for its segregated mandate recently departed, with only the promise of a replacement, it was decided “enough was enough” and the manager’s International Shares option (along with its portion of HostPlus’ multimanager options) was removed.
Sicilia said a replacement International Shares option, backed by one of the fund’s existing managers, would be offered to members in due course.
Meanwhile Bridgewater Associates’ Diversified Fixed Interest option has also had to be closed.
This option contained a passive credit core, overlaid with Bridgewater’s multi-strategy, unconstrained Pure Alpha strategy.
“We love Pure Alpha, but unfortunately one of Bridgewater’s major passive credit investors said it was pulling out of that fund – leaving three or four Australian super funds as its only clients,” Sicilia said, adding that Bridgewater had long stopped searching for new passive fixed income business.
“If we’d stayed in, we were advised by KPMG that we’d have been subject to the Controlled Foreign Corporations Act,” Sicilia said, refering to the “draconian” tax rules set up primarily to beat money laundering by Australians using offshore vehicles.
Bridgewater Pure Alpha will remain a feature of HostPlus multimanager options, however its Diversified Fixed Interest will in due course be replaced with one managed by BlackRock, using an enhanced passive approach.