QSuper used two sessions at the AIST ASI conference to explain its shift away from peer-benchmark investing, following its move to cohort strategies earlier this year.
Greg Hall, portfolio manager at QSuper, spoke of how messages of future projected adequacy of income in retirement from the fund outweighed any other information members received.
Research of QSuper members shows information they receive from the fund is far more influential than anything received from the media, a finding Hall said was counter to common perceptions.
This is significant in that back-testing of QSuper cohort strategies shows it came close to bottom of peer fund performance in one out of the past three years.
Instead, the goal for the investment team at QSuper, said Hall, was to achieve a reasonable retirement income with a high probability of outcome.
Bob Scheuber, chair of the QSuper investment committee, also spoke and revealed how the investment beliefs of the board were aligned with this new strategy.
The board’s foundation belief is that risk is born by the member. From this principle, it seeks to diversify by risk premia and not by asset classes.
He added that the board did not believe alpha can be reproduced in all asset classes across the board, which meant QSuper approached active management in a “very disciplined way”.
Olivia Engels, managing director and head of active quantitative equities, Asia-Pacific, at SSgA, spoke in the same session as Greg Hall on the topic of closing the gap between fund and member objectives.
She said her conversations with investors revealed many were redefining what investment success looks like and that there was now a greater focus on the avoidance of loss.
Engels’ presentation explored how reducing the weighting of the top six stocks in Australian equity portfolios could reduce volatility from 15 per cent to 5 per cent.
Such approaches, which narrow the range of outcomes for investors, are popular in retirement portfolios and the retail market, but increasingly funds are looking at them for the accumulation phase, said Engels.