First State Super will see its internal investment team rise from 12 to around 22 people over the next six months as part of a push for a more dynamic approach to opportunities.
The broader internal expertise is intended to help make smarter decisions on strategic asset allocation and in the choice of fund managers, but there are no plans as of yet to manage assets in-house for the $43 billion fund.
Michael Dwyer, chief executive at First State Super, said: “Our view is not to have six traditional buckets and put a percentage against those and fill them regardless of risk and cost. It will certainly be a very active approach to investing in the markets where we see opportunities rather than just filling buckets.”
There will be a greater focus on real assets and much of the responsibility for this will rest with Damien Webb who joins in January. The former head of multi-manager at Perpetual will have the newly created role of head of income and real assets.
Dwyer explained this new focus on income.
“Traditionally we have been a conservative investor, we have had a significant amount of the money passively invested with a select number of active managers incentivised to outperform and we have placed a high value on liquidity. That has served us well during the financial crisis, but particularly going forward we need to look at new types of opportunities.”
The fund will search in domestic and overseas markets for alternative products as a means of looking beyond a seller’s market for infrastructure assets.
“The infrastructure market is an interesting market, but it is a fairly hot market at the moment and you do not want to be in the business of overpaying for assets.”
Dwyer confirmed there were no immediate plans to use the fund’s scale to run assets internally, but said this would be investigated as the “months go by”.
Among the new recruits starting in January are Michael Blayney who was until recently head of diversified strategies at Perpetual and Dr Ross Barry, the former head of portfolio construction and diversity at Towers Watson. The team is led by Richard Brandweiner, director of investment services, who joined in May from Perpetual.
In its most recent investment update, the fund stated it was seeking to reduce the amount it has in shares following strong recent performances and it was also taking advantage of what it describes as “some interesting private equity investment opportunities”. The update concludes: “Overall, our objectives remain, as always, to diversify and not to pay too much for assets.”
The balanced fund returned 14 per cent over the year to the end of October and 7.2 per cent over five years.
