Sunsuper’s 12 strong investment operations team has identified over $10 million of potential cost savings and revenue in the last six months.
The team, which has expanded by five members in the last year, has scrutinised portfolio activities to optimise cost efficiency from transactions, asset transitions, operational changes and tax liability. It has also improved the internal risk and performance analytics capabilities for the $30 billion fund.
Savings have been generated through new approaches to asset transitions and centralising transactions across some portfolios.
Lounarda David, head of investment operations at Sunsuper, said the fund had set up a program in December that would generate significant revenue from securities lending.
“We drive our managers and our custodians pretty hard to get extra value out of our arrangements and relationships,” she said. “We analyse the transactions across the portfolios. The managers only see their portfolios, but we see the whole fund, and we use techniques to add more value and reduce leakage.”
She asserts that while Sunsuper may outsource some activities, her 12 strong investment operations team have extensive experience in managing the outsourced functions and have also built internal capabilities for operational due diligence and transition management.
Foreign currency exchange is a particular focus and an area often poorly understood and managed by superfunds, she believes.
“It is amazing how quickly you can see improvements,” she said. “We started with our own analysis, challenging processes, scrutinising transactions and executions, then rearranged our operating model and execution arrangements and started seeing the benefits.”
The growth in the size of the investment operations team has freed up time for the front of office investment team to focus on their core competencies. Much of this has been in the timely generation of a range of in-house performance analysis and portfolio information.
“The investment team spends a lot of time on generating alpha and finding the sources for that and we try to make sure we close leakages and implement their decisions in an efficient and cost effective manner” she said.
Lounarda David is speaking on the subject of what the ideal investment operations model looks like at the 18th annual Investment Administration Conference in Sydney on February 18. The conference is chaired by Leigh Sales of ABC’s 7.30 program.
To register for the conference go to https://www.etouches.com/ehome/index.ph.p?eventid=92999.