UniSuper CIO John Pearce has autonomy to make tactical asset allocation decisions without first seeking approval from the board or the investment committee.
“Our role as the investment committee is to give high-level advice, to be a sounding board for the management and to be involved in decision-making at a high level only. So that is broad asset allocation,” Peacock says.
“John and his team can make tactical decisions without referral. We agree [on] strategy and he implements it. Our role is monitoring the performance and the process.”
Asset allocation can differ across the fund depending on the risk exposure members choose. The balanced option has 36 per cent in Australian equities, 30 per cent in fixed income and cash, and 20 per cent in international shares, emerging markets.
The remainder consists of mainly unlisted property, at 9 per cent, and an infrastructure-heavy alternatives allocation of 5 per cent. It has been selling down its private equity commitments.
“We are reducing our exposure to private equity. We have been disappointed with the results over time and it is an expensive asset class.”
The investment committee has prominent business identities such as UniSuper chairman Chris Cuffe, of Colonial First State (CFS) renown, and former ANZ CIO Bruce Bonyhady.
It also has two members from academia: La Trobe University vice-chancellor Paul Johnson and Monash University banking and finance professor Mike Skully. Former CFS head of credit Tony Fitzgerald joins Wesfarmers board member Charles Macek as two external appointees on the committee.
“We are a little unusual to have so many external specialists on our investment committee. Some board structures just have board members and then three or four of them might form a sub-committee for investment,” Peacock says.
UniSuper does not use external investment consultants, with the investment committee leaving it up to management to select and interview asset managers.
About 90 per cent of its assets are managed externally. But Peacock says the fund has been looking to grow its in-house management capabilities in recent years, particularly in the areas of core Australian equities and fixed income, listed property and infrastructure.
Peacock says in-house management had driven down costs and would add value.
“We thought we could do a certain amount at lower cost and add a certain amount of value as well, provided we had a process which we all agreed with and we stuck to that,” he says.
UniSuper has made some high profile infrastructure acquisitions in recent years, including its stake in AquaSure, the company behind the Victorian desalination plant. It also has 49 per cent ownership of Adelaide airport and last year lifted its investment in Brisbane Airport.