Equipsuper Superannuation Fund has halted its merger with Vision Super because it felt its investment team was not going to be supported.
Equipsuper manages $4.6 billion in assets, of which about $2.1 billion is managed by external fund managers and $2.5 billion is managed by its chief investment officer and eight others.
“The investment team at little extra cost could manage another $2.5 billion and therein lie significant savings,” says Andrew Fairley, Equipsuper’s chairman.
Vision Super outsources its investment decisions to asset managers, according to Fairley.
“We went into this merger years ago with a terrific investment model that delivers outstanding results. We have not got the confidence that this investment model will be fully supported by a merged board,” says Fairley.
Vision Super and Equipsuper began talking about a merger two and a half years ago, says Fairley. Toward the end of 2010, he says, the two funds signed a merger agreement that would have created a $10-billion fund with 160,000 members.
Superannuation funds are merging or examining mergers because regulatory changes are putting pressure on them to lower fees per member yet deliver improved services as volatile financial markets crimp fund returns.
The merger between the two funds was to take place on June 30 this year, according to Vision Super.
“Vision Super was therefore surprised and disappointed to be informed that the Equipsuper board had decided to withdraw from the merger,” the fund says in a statement on its website.
“Vision Super chairman Rob Spence is making further enquiries to clarify the basis for the Equipsuper withdrawal.”
David Moxon, Vision Super’s chief executive, declined to comment beyond the statement.
Equipsuper’s Fairley says the merger with Vision Super was proving very difficult.
“It’s been an arduous process since 2010,” he says.
Equipsuper says it has no immediate plans to merge with another fund.