David Hartley, chief investment officer of the $18.2-billion SunSuper fund, says MySuper reforms could be disastrous.
“If MySuper is introduced the wrong way you run the risk of having the biggest Ponzi scheme the world has ever seen,” says Hartley.
“In MySuper many products will look the same and there could be an overemphasis on reported fees. If a big portion of the market is passive then price discovery won’t happen and the rationale of having passive investments breaks down.”
Hartley says that since 2008 SunSuper has been examining whether to take investment decisions in-house.
The six portfolio managers of SunSuper decide on the best investment strategy, he says. SunSuper invests in stocks, bonds, currencies, hedge funds, property, infrastructure and private capital.
“Potentially infrastructure and fixed income could come in-house,” says Hartley.
He expects more mergers among superannuation funds.
“Some funds who merge will merge again,” says Hartley. “If you’re not niche or big you’re not quite sure where you are.”
SunSuper has 15 Sydney-based investment staff. It is looking to hire a fixed income and currency analyst and a strategic risk analyst, says Hartley, who has been CIO for more than six years.
SunSuper, which changed its insurer from Sun Corp. to AIA, is also examining whether to continue it custody contract with National Australia Bank Ltd.
“At the moment we’re looking at other companies as part of a normal review process,” says Hartley.
Annual inflows into SunSuper are $2 billion, he says.