The pace of increase in internal investment teams at superannuation funds is increasing, according to an Investment Magazine survey.
Feedback from 19 chief investment officers at some of the largest super funds found that 40 per cent are planning on adding internal capacity over the next three years. A year ago the same survey found only 29 per cent planning to do this.
Funds that have gone on record as increasing their investment teams in 2013 are AustralianSuper, Cbus, First State Super, NGS Super, QSuper, REST and State Super.
Some are stating a desire to gain greater accountability and to save on fees.
Greg Nolan, general manager of investments at CareSuper, described it as “inevitable” partly due to compliance demands which means funds are more accountable for the decisions made.
“Funds have to better understand the decisions taken and the consequences,” he said. “To do this they need more resources to assist with the decision making process. Advice from an external source alone is no longer adequate.”
Jo Townsend, chief investment officer of Rest, who also took part in the survey described the trend towards internalization as a “rush”.
While John Coombe, executive director at Jana Investment Advisers said the move would help funds compete for scarce property and infrastructure assets. “If you are competing for real assets you better have the resources on board to manage them and the relationship with your infrastructure manager.”
Elsewhere in the survey, which is to be published in full in December’s edition of Investment Magazine, three funds told of their plans to reduce their dependence on investment consultants.
One government fund and one industry fund said they were moving from a position of using their consultants in help with decisions, to one where the consultant was only used for manager research. One retail fund said they were dropping the use of consultants from manager research and no longer using them.