Leaving his post at the $38-billion fund, First State Super chief investment officer Mark Sainsbury has announced his retirement from financial services. No direct replacement has been announced, but former Perpetual group executive of income and multi-sector products, Richard Brandweiner, will be taking up the position of director of investment services next month.

Sainsbury reflects on his time at the fund, having driven substantial change during his tenure. Apart from asset growth, the fund has expanded its member choice offerings and refined its environmental, social and governance policies over the years, including last year’s move away from tobacco in investment portfolios.

The 2011 merger between First State and Health Super was also a milestone.

“That, as a little collective, makes me pretty happy,” Sainsbury said.

Sainsbury is leaving the fund in good shape, saying it’s dealt with some reasonably extreme movements in investment markets.

“The concept of extreme movements in investment markets has been there ever since I’ve been working. I’ve been here since the ‘87 crash and then seen virtually every crash since.”

Sainsbury said super funds need to be flexible and reflect a system that evolves to meet market circumstances.

“There are a couple of investment decisions where we’ve done specific tactical asset allocation adjustments of the portfolios that I’m particularly pleased with because they were successful responses to the market circumstances.

“There are others, where you turn around and as a result of your strategic asset allocation of your portfolio, it works pretty well for you.”

Sainsbury joined the fund in 2005, a year after Michael Dwyer took the helm as chief executive, when it sat at roughly around $6.5 billion. He said “particularly buoyant periods” in investment markets between 2000 and 2007 contributed to the fund’s growth. In addition, a 2011 merger with Health Super boosted the funds under management to $31 billion.

Super as large as the economy

Sainsbury acknowledges his role in the fund’s growth as having developed the investment team, and watching the evolution of the investment strategy and the creation of the investment structures. He added that the model was virtually all outsourced investment when he first arrived.

“Now we still operate on a largely outsourced model; we do do some activities in house, but the team has grown from, effectively when I started, one person through to 13. And we’re a reasonably small investment team compared to some other entities in the market place.”

In his overall career, Sainsbury said he was influential in developing member choice offerings. In his time at State Super in 1992, he designed the member choice product.

“Strangely enough, in 1992 the concept of member choice spectrum of the funds wasn’t common practice. So the concept of lifecycle funds was still reasonably in its infancy in 1992.”

In terms of the industry’s overall growth, Sainsbury said it’s playing an appropriate role in financial services.

“The superannuation industry now is as large as the economy, almost as large as banks. So the end result is, the super industry has taken its place as a significant component of the financial services industry.”

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