It’s not “rocket science,” says Anne Ward, but QANTAS Super has a set of six guiding principles that it believes is guiding good governance and improving fund performance.
The QANTAS Super mission statement, said Ward, is to be a “fund of choice” for QANTAS employees and their families, and while, as corporate fund, it may be fighting the wider industry trend, there is nothing anachronistic or old fashioned about the principles behind the governance.
The trustee board of 10 at QANTAS Super is made up equally of member and company representatives, and under the board are investment, audit risk, services, remuneration and now StrongerSuper committees dealing with individual issues.
“It begins with a clearly articulated strategy around things like strategic asset allocation and clearly stated objectives such as return targets for all of the investment offerings,” she said. “They are specific and aligned to member objectives, and understood by all members who chose to engage.”
2 Investment beliefs
“I think this is something which takes time and shouldn’t be rushed,” said Ward. “These are around things such as diversification, and how risk premia can enhance investment returns. “Equity risk will remain the key driver of our equity returns and while we aim to be a leading super fund we will only be a first mover in new investment areas when we have sufficient investment governance for such decisions.”
“We have a delegation matrix to assign responsibilities and ensure that it is incredibly clear where accountability lies, in areas like investment between the trustee and the investment committee,” said Ward. “We know the scope of authority which is delegated to each level and we have a menu or authority mechanisms and dollar-level limits depending on the types of decisions.”
4 Risk management
“By that I mean processes and tools and systems which are designed to manage investment risk,” said Ward. “At QANTAS Super we have invested in a risk system which gives us a current real-time understanding of our inherent risks, and that enables us to ensure that the level of risk in each investment is appropriate to meet its objectives, such as understanding the impact of new managers and strategies.”
5 Operational efficiency
“We do believe that costs matter but when we focus on costs we like to focus on value, and we believe that efficient implementation can save many basis points for our members,” said Ward. Last year, for example, QANTAS Super implemented an agency foreign exchange program, which delivered “complete transparency” on FX trading costs across the fund’s $2.4 billion equities and alternatives portfolios. “In its first year that yielded $1.5 million in net savings, and that is 3 basis points at the growth option level and we think that is worth doing,” said Ward. “We are also moving to a new planned after-tax investment model, and we are expecting 18 basis points in net savings per year for our members.”
The final principle is “having the right people at every level.” “They don’t all have to be on staff,” said Ward. “We can access all types of expertise from outside but I would urge all trustees not to compromise on the quality of people who contribute to your fund.”