VicSuper, the $9 billion not-for-profit Victorian public sector fund, has chosen two US funds to manage $220 million of investments in government, corporate and securitized bonds, bank loans and emerging market debt.
Los Angeles-based asset manager Payden & Rygel was awarded a $110 million mandate by Melbourne-based VicSuper. The Melbourne-based fund also gave $110 million to New York-based fund manager Stone Harbor.
Payden & Rygel and Stone Harbor will manage the money specifically for VicSuper. The $220 million of funds will not go into a so-called pool account.
“It gives us control,” says Oscar Fabian, VicSuper’s chief investment officer. “We through the custodian hold the assets.”
The new VicSuper mandates mean that the world’s biggest asset manager, BlackRock, which was given a $3.8 billion mandate last year by VicSuper, has seen its assets it manages on behalf of the fund shrink by $220 million.
Fabian says as the fund appoints new managers who will actively manage investments it will take money from BlackRock who manage VicSuper investments on an index fund basis.
VicSuper wants about 70 per cent of its publicly traded securities to be managed by index funds and 30 per cent by active fund managers such as Payden & Rygel.
In emerging market investments, however, VicSuper will give index asset managers 50 per cent of its allocation to such markets. Active fund managers will get the remaining allocation.
Payden & Rygel manage about $70 billion. Stone Harbor manages about $40 billion. Both have integrated environmental, social and governance factors into their investment strategies.