State Super general manager asset allocation Charles Wu has been recognised by the Australian Institute of Superannuation Trustees (AIST) as the winner of its 2017 Investment Rising Star award.
Wu accepted the honour on Wednesday September 6, at AIST’s Australian Superannuation Investment Conference (ASI 2017) held on the Gold Coast.
He is the recipient of a strategic leadership study tour in the UK valued up to $10,000.
The annual award in its fifth year, which is sponsored by Hermes Investment Management, recognises upcoming investment leaders in the profit-to-member superannuation industry.
Candidates for the Rising Star award are assessed by an anonymous panel of industry experts on the following criteria:
- Leadership within their team or organisation.
- Demonstrated investment innovation.
- Contribution to community awareness of superannuation.
- Potential to be a chief investment officer (CIO) in the future.
The judges said Wu demonstrated a “rare combination of technical and social adaptiveness”, as well as “creativity and a willingness to learn continuously”, signalling his “potential to be a great CIO in the future”.
“Charles has been instrumental in a number of successful projects at State Super and has demonstrated creativity and a strong willingness to learn,” AIST chief executive Eva Scheerlinck said. “These traits, alongside a strong focus on members’ best interest, make Charles a future leader to watch.”
State Super runs a complex mix defined benefit (DB) and defined contribution (DC) portoflios. The fund outsources the DB investments to a master fund, while managing the DC portoflio in-house, but remains 100 per cent accountable for the strategic asset allocation across both. As a closed fund, State Super faces unique liquidity profile challenges.
Leadership in SAA review
Wu led a recent review of the fund’s strategic asset allocation, which accounts for 80 per cent of investment performance. In this he worked closely with the fund’s board, chief executive, chief investment officer, external master fund manager and advisers.
The judges noted that by incorporating a shorter time horizon to reflect the fund’s membership profile, Wu demonstrated his member-focused mindset.
Separately, he harmonised the illiquid asset allocation amongst pre-mix options to further mitigate liquidity requirements arising from member switching, allowing State Super to harvest additional illiquidity risk premium via an increased allocation to illiquid assets. This is tipped to be an important return driver in the near term.
Embracing machine learning
The judges also noted Wu’s strong contribution over the past 18 months to the fund’s “machine learning” project that uses data science techniques to help inform investment decisions.
Wu’s team spent 18 months developing a holistic process to assess data in an unconventional way by employing data science techniques such as supervised and unsupervised machine learning. The models were created internally using programming language Python with data provided via FactSet.
The models have demonstrated out of sample testing results of a circa 60 per cent directional hit rate for selected markets. The team will continue to develop and examine various methods to enhance the process.
Wu is also an active member of the CFA Institute both on a global and local level. He mentors students, assists in career planning, and has been an advocate for ethical training and diversity.
He is a member of the CFA Society Sydney board, chair of the CFA’s University Outreach Committee, and a member of the CFA Institute’s Diversity Committee. He is also a member of the University of Sydney’s Student Managed Investment Fund investment committee.
Charles Wu will moderate a panel on the topic ‘Expectations, complexity and portfolio construction’ at the upcoming Investment Magazine Fiduciary Investors Symposium, to be held in Healesville, Victoria, November 13 to 15, 2017. For registration enquiries, contact Emma Brodie on +61 2 9927 5708, [email protected] or visit the event website.