In late 2005, Sunsuper trustee Peter Annand spoke frankly with the fund’s new chief investment officer. “He said the fund is $6.5 billion and growing and that we have to set up some delegations,” recalls David Hartley, who has been Sunsuper’s CIO for more than six years now. “At the time, every investment decision was a board decision.”
The Milton, Brisbane-based industry fund has more than tripled in size and now manages $19 billion. Its investment team has grown to five portfolio managers and nine analysts. The team, tasked with implementing the investment strategy set by the fund’s board, has been assigned duties that once fell to Annand, who was then chair of its investment committee, and other trustees. “The investment committee has to be focused on governance,” Hartley says. Day-to-day matters, such as keeping track of enlisted fund managers and others pitching to win investment mandates, can distract them. “I’ve seen a lot of fund manager beauty parades over the years. How you determine your choice of manager on the basis of a 30-to-40-minute presentation is hard. That’s $200 million swinging on people you’ve never met.”
We’re speaking in the Plato meeting room at Sunsuper’s investment office on Hunter Street in central Sydney. Neighbouring rooms bear capitalised surnames of Western intellectuals who have “changed the way people think” such as Da Vinci, Einstein and Keynes. A signed souvenir photo of Cathy Freeman crossing the finish line to win the women’s 400-metre sprint final at the 2000 Olympic Games in Sydney hangs on the bright orange wall behind Hartley. Less than 10 minutes after being photographed outside Australia Square for this story, he is relaxed, his pale bronze and blue-striped tie and black pinstriped jacket already hang on the back of the vacant chair beside him.
In addition to selecting managers, his team has rein to make opportunistic investments without board approval. They also execute co-investments. If, for instance, a privatemarket fund manager running Sunsuper money has reached capacity, the team can use the manager’s research and due diligence at no extra cost to make their own investments in similar deals. Such transactions include the fund’s 2008 co-investment with The Sentient Group to buy 11.8 per cent of Australian geothermal energy start-up Geodynamics.
Despite Sunsuper’s strong growth, it can still make small and opportunistic investments that can potentially boost the large fund’s headline return, Hartley says. “We’re big enough to be meaningful for investment managers and small enough to be interesting with investment strategy.”