HESTA has recruited former Future Fund boss Mark Burgess to chair its new investment committee as the $36 billion industry super fund embarks on its plan to build an in-house investment team.
In January 2017, following a review facilitated by Willis Towers Watson, HESTA announced a five-year plan to overhaul its strategy by bringing direct oversight for a portion of its investments in-house.
As inaugural chair of the investment committee, Burgess will play a key role in overseeing the governance of the new strategy.
Burgess said he was looking forward to helping the fund meet its “ambitious” investment objectives. The fund’s default option has a target to deliver net returns of CPI + 4 per cent a year, over a 10-year period.
“I was drawn to HESTA for its leadership as a responsible, long-term steward of members’ investments, its unwavering commitment to improving outcomes for its members and women in Australia, and its history of strong investment performance and innovation,” he said.
More than 80 per cent of HESTA’s 820,000-plus members are women working in the health and community services sector.
Burgess will join the HESTA board as an independent non-executive director.
HESTA has also appointed Melda Donnelly and Tim Hughes to the newly created investment committee. Donnelly and Hughes were previously members of the fund’s investment advisory panel.
Rounding out the investment committee will be HESTA’s independent chair, Angela Emslie, and HESTA directors Anna Claude, Lisa Darmanin, Gary Humphrys and Klaus Zimmermann.
HESTA chief executive Debby Blakey said the investment committee would assist the board in setting the fund’s investment objectives and ensure investment risks are monitored and managed.
“We’re establishing the right governance structures and processes and we’re further building the capabilities and capacity of our investment team so we can continue to deliver strong long-term net returns for members,” Blakey said.
The committee will meet six times a year.
The fund is now recruiting a new chief investment officer to lead the implementation of the in-sourced investment strategy.
Longstanding chief investment officer Rob Fowler will remain at the fund in the newly created role of head of investment execution, with responsibility for investment monitoring and performance, and environmental, social and governance (ESG) policy.
HESTA is the latest in a string of major Australian superannuation funds to move towards an in-house model of investment management in recent years. Funds such as AustralianSuper, UniSuper, First State Super and Cbus Super have led the trend. Like all of those funds, HESTA intends to continue to allocate a large proportion of its assets to external managers.
Larger funds are embracing in-sourced management models to try to capture economies of scale and drive down costs, along with gaining more control over how their capital is managed.