Staff at the $4.6-billion Equipsuper could start making tactical investment bets through futures contracts by the end of the year.
Equipsuper’s seven-person investment team aims to begin making investments in all asset classes by using futures based on major stock and bond market indexes by December. The contracts would enable the fund to place trades without incurring the transactional and tax costs of shifting assets among outsourced investment managers.
“It gives us flexibility to move money more quickly,” Danielle Press, chief executive of the Melbourne-based industry fund, said in a telephone interview yesterday. “It gives stability to investment managers because we will not be taking physical cash from them.”
Equipsuper’s investment team, led by chief investment officer Michael Strachan, will be responsible for managing the publicly traded securities, which are agreements to buy or sell an asset at a specified time in the future.
Futures could provide tax benefits by preventing Equipsuper’s fund managers from realising capital gains on sold stocks and breaching the so-called 45-day rule, which blocks franked dividends to short-term investors.
Equipsuper’s investment committee, comprised of fund trustees, supported the decision to start trading futures in a meeting one year ago, Press said. Merger negotiations with the $4.9-billion Vision Super, which collapsed in May, stalled the plan.