James Savage

EquitySuper, the $1 billion fund controlled by Equity Trustees, has awarded a $20 million mandate to Tribeca Investment Partners for its long-standing small-cap fund.
The mandate follows EquitySuper’s integration with the $280 million OAMPS fund. Equity Trustees acquired the management rights to the fund last November from Wesfarmers. EquitySuper was formerly known as Wealthpac.

According to Adrian Young, EquitySuper’s chief executive, the fund was able to reduce the investment management fees for both OAMPS and Equity Super’s other clients following the integration. OAMPS had previously been with JANA’s implemented consulting service.

He said the next phase of the integration would involve the transfer of the administration of 24,000 members from AAS, which was scheduled from April 29. EquitySuper was one of the early adopters of Tribeca’s alpha extension long/short fund, called Alpha Plus, when it awarded a $20 million mandate in December 2006.

Tribeca’s small-cap fund is one of 13 managers in the Mercer survey with a 10-year track record. It has returned an average 14.3 per cent a year for that period, against the S&P/ASX Small Ordinaries return of 8.6 per cent.

James Savage (pictured), Tribeca’s head of sales and marketing, said that from an investor’s point of view, the important thing with Australian small caps was the alpha generation rather than the beta. Most managers have beaten the index, he said. “Small caps are all about alpha, as long as you have a good manager. You shouldn’t over worry about small-cap beta.”

The small-cap beta effect has been only slight in Australia for the past 10 years. The S&P/ASX 100 large cap index averaged 8.0 a year against the small-cap index’s 8.6 per cent. Over the same period, even the lower quartile manager average from the Mercer survey was 12.3 per cent. During the past year, however, the small-cap effect returned in a big way, with the small-cap index returning 29.5 per cent in the 12 months to January compared with the top 100’s 7.7 per cent.

Savage said the Tribeca small cap strategy, which has about $250 million under management, still has “good” capacity for institutional investors. The fund is run by the firm’s Managing Director, David Aylward, and Lachlan Drummond.
Equity Trustees has retained its other small-cap manager, BT.

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