The big industry fund, which will manage over $40 billion once Westscheme rolls in before June 30, already has 10 Australian equity managers, and nine of them are sharing only half that portfolio, given the fund’s controversial decision to index 50 per cent through Industry Funds Management in 2009. Given the rhetoric about “over-engineered portfolios” put forward by chief investment officer Mark Delaney at the time of that decision, it seems unlikely that AustralianSuper would wish to add all four rolled-over mandates into its portfolio – so for Bennelong Investment Partners, Macquarie Funds Group, Ankura Capital and Colonial First State Global Asset Management, the lobbying of Frontier Investment Consulting (as well as the internal investment team) will begin. Macquarie and quant shop Ankura managed 36 per cent apiece of Westscheme’s $970 million Australian equities portfolio, while Bennelong and CFS GAM split the remaining 28 per cent equally.
On the international equities front, the Perth-based scheme’s $550 million-plus portfolio was shared between AQR, PanAgora, Massachussetts Financial Services, the Colonial First State-backed fundamental indexer RealIndex Investments, and Schroder Investment Management’s emerging markets fund. JANA Investment Advisors is the wielder of influence over the global equities portfolio – it’s also responsible for advising AustralianSuper on currency, fixed interest, cash and hedge funds. Frontier handles Australian equities, property, infrastructure and unlisted asset classes, while Westscheme’s consultant, Access Capital Advisors, will be gradually edged out of involvement.
Announcing the re-invention of Westscheme as a WA division of AustralianSuper last month, the respective CEOs talked a lot about scale benefits and better insurance coverage for the new WA members, however a major trigger was the ability to retain the value of Westscheme’s deferred tax assets (DTAs) if the successor fund transfer occurred before June 30, 2011. Despite lobbying from the likes of ASFA, the Government has only agreed to allow the tax concession on a case-by-case assessment for transfers occurring after that date. Curtis said his team was still in due diligence to determine the precise value of Westscheme’s DTAs, as well as the best transfer technique.