Cbus has appointed Grant Harrison as investment manager of private markets in its move to boost inhouse investment resources. Kristian Fok, executive manager of investment strategy, says the fund is likely to finalise four more appointments in the next few weeks, expanding the analyst team.
The additions follow an injection of 15 new staff, the culmination of which will see Cbus’ investment team almost doubling in size this year alone. Earlier this year, Cbus recruited Brett Chatfield as investment manager for public markets and the fund also created the role of investment manager for risk.
How it came in house
The decision to increase inhouse resources followed a strategy review conducted by the investment committee last year, said Fok.
“That really led to a number of outcomes. One of them was this focus on the primary objective, which is the CPI plus 3.5 per cent, but being mindful of the risk that we’re taking to achieve it. And the consequence was to also ensure that we have the right resources to actually best achieve that objective.”
The more risk-averse approach that has emerged has the fund thinking about how it can better understand the risks it currently takes, said Fok. Cbus is also more willing “to be different” in order to produce a better portfolio outcome, he said.
“And [we’re] also being very mindful around the fact that markets, all asset classes from time to time, can be cheap or expensive, and we should be willing to be more active around asset allocation.”
Fok said the $22-billion fund isn’t looking to directly invest more in house at this stage, but identifies the need for closer relationships with external parties, including fund managers. Cbus was recently part of a consortium of funds, led by Industry Funds Management (IFM), that won a tender for the 99-year lease of two ports in New South Wales, a process that Fok said gave the fund much greater insight in terms of due diligence.
“It also gives us a greater governance role. There’s far more transparency in terms of the actual asset itself. So these are the sort of things that we think, as the fund gets bigger, should have more capabilities for doing.”
In house, Cbus does some direct investment in term deposits, but Fok said it’s content to use investment managers for the other assets, on the basis it’s a “good commercially acceptable relationship”.
“…There’s a lot of merit in using external managers. However, if we find that we aren’t able to get commercially acceptable arrangements, then we will reserve the right to look at options in house.”
The property arm
Fok said the fund indirectly invests in house through its wholly-owned property arm, Cbus Property.
“They actually not only invest in commercial property and residential in particular – they’ve got a bit of retail as well – but they also have quite a big presence in terms of building construction. They actually develop the product, as well as hold and invest it.”
Fok joined the super fund in November last year, from Frontier Advisors, in a newly created role focused on strategy and investment managers. As co-chief investment officer, he works with Trish Donohue, executive manager of investments, who has primary oversight of risk and governance aspects of investments at Cbus.