The $27 billion industry superannuation fund REST will push the button and go live with its internal, actively-managed Australian equities strategy in December, expanding on its established funds management capabilities in infrastructure, fixed income and cash.
REST, which has been internally managing money for over 16 years, has been running a paper Australian equities portfolio for around one year. It has a three-person equities team, headed by former Goldman Sachs Asset Management analyst Chris Pidcock, and is currently recruiting a fourth member of the team.
REST chief executive Damian Hill said the equities team would initially manage a small pool of around $100 million, funded by cash flow.
“We believe in active management and have no index funds whatsoever,” he said. “The tracking error won’t be massive however it will be an active core style.”
“We haven’t taken money away from any external managers at this stage but will continue to give money to the internal team as we bed the process down and depending on their performance.”
Hill said the fund’s decision to launch internal Australian equities capabilities was not driven by cost savings.
“You need to measure the net return to members. There’s no point measuring cost savings and giving up returns, it’s all about the net return to members. The most expensive thing you can do is save on cost but give up returns,” he said.
Earlier this month REST also became the first industry fund to launch a MySuper product for the corporate sector.
REST Corporate is an employer-sponsored MySuper offering with salary-based insurance, designed to make compliance with the government’s Stronger Super regulations simple for employers.
REST won the Best Fund: Investments award at the inaugural Chant West| Conexus Financial Super Fund Awards 2013, where it was commended for being a standout performer in down markets.