Australia’s biggest super fund by membership, REST Industry Super, has switched its custodian after an 18-year relationship and a review which lasted about 14 months.
REST has appointed State Street for a range of services including core fund accounting and master custody, replacing the longtime incumbent JP Morgan.
Damian Hill, REST’s chief executive, said yesterday that the fund was mindful of its future development and the custody mandate involved a package of services to suit the fund’s growth path.
He expected, for instance, that REST would be increasing its international investment allocation in the future and noted that State Street was one of the largest providers to complex pension funds in the world.
“We expect to be able to leverage off that expertise,” he said.
While the precise transition schedule has not been confirmed, Greg O’Sullivan, State Street’s v.p. of investor services, said he expected this to be accomplished by June 30.
He said the REST appointment marked an alignment for the future and the fund would be able to access various State Street services across the group – both current and future services.
For example, State Street would launch this quarter a new exposure monitoring tool for clients to be able to “look through” all their holdings to the ultimate end investments and this would be available to REST.
O’Sullivan said the firm would also be able to offer REST some “enhancements” around the management of TOFA administration.
Ian Martin, State Street Investor Services and Global Markets head, said that there was considerable interaction between the two non-funds management divisions of State Street in the tender process (other than State Street Global Advisors, the separate funds management arm). He expected Global Markets to also contribute significantly to the overall value proposition for REST.
REST is State Street’s second super fund client, following the appointment by Non-Government Schools in 2008. State Street had vacated the super fund market in the 1990s to concentrate on funds managers but then re-entered the field as super funds grew more sophisticated in their demands.
The review process was run by REST senior investment manager Jo Townsend with assistance from consultant JANA Investment Advisers.
Interestingly, Townsend previously worked for Non-Government Schools when it made its decision to go with State Street.
Hill said the custody field was very competitive and he was grateful for JP Morgan’s good service to his fund over a long period.
REST has about 1.8 million members and $18 billion under management for the retail services sector.