AustralianSuper has ramped up the day-to-day responsibilities of its asset class heads and investment committee, as its board switches its focus to strategy decisions.
Chief investment officer Mark Delaney said it’s a move that is already paying off after he collected AustalianSuper’s award for Best Fund, Investments at the Chant West and Conexus Financial Super Fund of the Year Awards on May 21.
“Investments are all about who makes the decisions and the speed they make decisions. We’re trying to get better at that.”
He added: “What became clear was that the workload at the board and investment committee level was too heavy and there was inappropriate attention given to the wrong matters. So we moved decisions and delegated more to the investment teams. That freed up time to focus on the key challenges and issues.”
The move, which has taken place over the last 18 months, was inspired by the way companies are internally governed said Delaney, with boards having less control over day to day decisions. It’s an approach AustralianSuper has quietly instilled as it has continued to flesh out its considerable internal capabilities.
“It’s no different to how company governance works, in a way. A company board doesn’t make day to day decisions. They focus on strategy and organisational issues. Performance and investments should not be that much different.”
Fiona Trafford-Walker, director of consulting at Frontier Advisors, one of several asset consultants to AustralianSuper, believes the delegation of investment duties among super funds is set to expand, but cautions that internal reporting back to boards will need to keep pace.
“I hope when we see more delegation, we’ll see reporting of it what was done and how from internal teams back to boards where decisions involve moving the portfolio around, changing allocations and selecting investments and managers. A good board can still bring a huge amount to the decision making,” she said.
An offshoot of attracting more talent within funds are “intangible” cultural issues stemming from changes to remunerations and bonus structures.
“I don’t see remuneration issues getting out of hand, but there’s a change in culture when different people join funds, especially when they grow rapidly. For example in an industry fund, keeping that culture intact is hard work when you have more and more people,” she says.
On announcing AustralianSuper’s award, Warren Chant, director of Chant West, cited the evolution of the fund’s internal structure to include clearly delineated decision-making.
“A separate internal committee is now responsible for all matters relating to investment managers, while asset class heads have greater responsibility for developing asset class strategies. Combined, these changes have freed up the investment committee to focus on key strategic issues.”