BT’s asset owner teams are being streamlined into a single unit so as to better tailor solutions for clients. The move coincides with a shift of its MySuper portfolios into more illiquid investments.

The new operation will be run by David Lees, the general manager of investments and insurance at the BT Group, while Patrick Farrell will serve as its chief investment officer.

They will look after $14 billion of superannuation products such as BT Super For Life, $3 billion in other institutional money and approximately $9 billion in retail money that has come through financial advisers. There will be 24 investment professionals in the new team, 18 of whom will come from the current Advance operation.

Farrell said: “What is driving the move is the growing desire from clients for tailored portfolios for specific objectives, particularly for not for profit or charities which need a very, very specific portfolio.”

Currently such tailored solutions might have the input of several departments, which was not the best outcome for clients, he said. “We were trying to find a capability that was elsewhere in the group, we married that up to other capabilities we had either at Advance or the equities business and make it work for the client.”

Farrell said the purpose was not to reduce the headcount reduction but to allocate resources where they are most appropriate. “Over the next few months we will be looking at the positions and the deliverables on each of the teams and look where to allocate the resources.”

Farrell also revealed that BT’s MySuper products will seek a greater illiquidity premium in investments through its first allocation to unlisted property exposures in Europe and Asia.

Retail funds such as BT Super for Life have come under criticism from the research house Chant West for an approach to MySuper that favoured low-fee assets less likely to outperform over the long term due to a lack of illiquid infrastructure and direct property assets.

The unlisted property is being chosen for its yield and will sit alongside listed property in superannuation portfolios. BT is seeking unlisted property in Europe and Asia, as the US market is already well represented in its REITs exposure.

Farrell said BT’s super funds were asking: “How do we capture the illiquidity premium for the portfolios that do not need to be as liquid as some of the other portfolios.”

 

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