Having overhauled Australian Ethical’s approach to managing international equities in 2016, chief investment officer David Macri now has his sights set on a revamp of the international fixed interest portfolio.

The extraordinary environment in global markets means getting the timing and execution of the plan right will be critical.

Australian Ethical is a $99 million ASX-listed retail superannuation and wealth manager with $1.7 billion in assets under management.

Macri is a finalist in the Conexus Financial Superannuation Awards 2017 in the category of Chief Investment Officer of the Year.

Throughout January, Investment Magazine will feature Q&As with all the finalists.

Here, Macri talks about the challenges and rewards of cracking open his investment universe.

IM: What was the biggest challenge to managing the Australian Ethical portfolio in 2016?

DM: During 2016, we implemented a new approach to the management of our international shares portfolio. Its theme used to be global energy; however, that was too narrow a focus and more volatile than I wanted.

As such, we removed the energy theme and changed it to broader investing across as many sectors as possible, while remaining true to our Ethical Charter, of course. The next step was to construct a portfolio from our restricted universe to minimise ex-ante tracking error.

cf-superawards-2017_webgraphic2We have since managed to achieve a less than 2 per cent tracking error.

This was a challenge because we had never constructed a universe from a ‘top-down’ perspective. The process included applying our ethical filters in a systematic way to all the stocks in the MSCI World Index, which contains about 1600 of them.

What proved to be your best call in 2016?

Over the past few years, we have been consistently adding ‘risk’ (from a very low starting point) to the domestic equities portfolio of our Balanced Option, which boosted performance in a meaningful way during calendar year 2016.

What do you expect to be your biggest challenge in 2017?

Establishing a process to manage an international fixed interest portfolio and deciding the best time to implement such a portfolio given the extraordinary scenario we find ourselves in.

Markets are a challenge. We have seen an unprecedented level of global monetary stimulus and bond yields are expected to rise despite the fact there hasn’t been a sustained increase in inflation and the global economy is still experiencing subdued growth.


The winners of the Conexus Financial Superannuation Awards 2017 will be unveiled at a black-tie event at the Ivy, Sydney, on March 9, supported by Vanguard and AIA Australia. You can purchase single tickets or tables for 10 by visiting the event website. The Conexus Financial Superannuation Awards proudly support The Wayside Chapel.

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