Energy Super has switched Australian equity mandates over performance issues and awarded the Brisbane-based manager Dalton Nicol Reid $400 million.
The money will be managed in a high conviction fund run by Jamie Nicol, which saw a 4.4 per cent outperformance of its S&P ASX200 benchmark for the year ended April 30, 2015 and has 12 year outperformance of 4 per cent per annum.
Energy Super stated the mandate was part of a strategy to work with conviction managers that were capable of high outperformance.
The $5.8 billion fund, which is advised by Jana, uses five Australian equity managers, its 2014 annual report lists Balanced Equity Management, Greencape Capital, Hyperion, JCP Investment Partners and Legg Mason.
Mark Williamson, chair of Energy Super, said a combination of robust corporate governance, realistic strategies to achieve returns, ease of administration and effective cost management were factors in the choice.
Other institutional investors that have placed large mandates with Dalton Nicol Reid include IOOF and Intrust.
Dalton Nicol Reid’s process seeks to identify quality companies that are mis-priced. This selection is based on earnings strength (particularly improving return), a superior industry position, good balance sheet, strong management and a low environmental, social and governance risk.
The firm believes markets are too short-term focused, which enables returns from investing in quality companies on a medium-term to long-term basis.