HESTA has awarded a $500 million mandate to IFM for its recently launched global indexed equities strategy, principally because of cost.
Rob Fowler, chief investment officer of the $33 billion super fund, sees the low-cost nature of the strategy, combined with IFM’s capability, as an effective way of gaining more basis points without an increase in operational risk.
“IFM have proven they can very effectively run an Australian indexed mandate, and in fact do other bespoke things, at a cost which is sufficiently below what the commercial operators provide,” said Fowler.
The global indexed equities strategy was launched in February and was the result of extensive collaboration between IFM and its clients over a two-year period, including some of Australia’s largest industry super funds.
Fowler added IFM had managed all of HESTA’s domestic index allocation for “quite some time” with proven capability and as such, their extension to global equites made sense.
“Longer term I expect bespoke global equity capability will be increasingly required by super funds. The expectation is that IFM, over time, will be able to develop those factor-investing portfolios as well,” Fowler said, adding he anticipated this to be more cost-effective than factor-investing portfolios currently provided by commercial operators.
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