Maintaining adequate portfolio diversification to offset risk in a liquidity crisis, at a time when asset valuations are generally stretched, is a priority for Sunsuper chief investment officer Ian Patrick.
Patrick has been CIO at the $40 billion Brisbane-based super fund since November 2015, prior to which he spent nearly 14 years with JANA Investment Advisers, including seven as the firm’s chief executive.
He is one of five finalists in the running for the honour of CIO of the Year at the 2018 Conexus Financial Superannuation Awards. Conexus Financial is the publisher of Investment Magazine, which will feature Q&As with all the finalists ahead of the announcement of the winners at a special black-tie event on March 8 at the Ivy Ballroom, Sydney.
Investment Magazine: What do you believe will prove over time to be the most significant decision you made in 2017?
Ian Patrick: I honestly believe that trusting the processes and capabilities within our team, that are set up to deliver on our objectives, will over time prove to be most significant, rather than a single decision in a single year. Over the last few years we’ve really focused on expanding and developing our investment team and processes to ensure we’re at the forefront of global investment trends and issues.
IM: What do you expect to pose the biggest threat to your portfolio in 2018?
IP: Even though I believe trusting the processes and capabilities of our team will be our biggest strength, as with all funds, falling prey to the belief that these are all-knowing and don’t need to be tested and re-tested is a risk. As such, for us it’s a continuous cycle of reviewing and enhancing to ensure that we’re effectively executing our investment strategy and delivering positive returns to Sunsuper’s members. At a macro level, always the biggest threat to any portfolio, not just in 2018, is an event or action that causes a meaningful liquidity crisis in markets.
What do you expect will be the biggest headwind to meeting your return target over the next five to 10 years?
The high starting point today for market valuations, whether in equities, credit, numerous unlisted/real assets or fixed income, is a headwind to returns over the next five to 10 years. This goes to the question of reward for risk. Our team is particularly focused on the question of pursuing incremental risk in searching to meet objectives at a time when many risks are fully priced.
How are you repositioning the portfolio to make it more resilient?
It’s less about repositioning our portfolio and more about the team ensuring that optimum diversification is maintained, both in terms of creating access to relevant opportunities and the rigorous evaluation of those.
Aside from investment decisions, what is taking up a lot of your time and focus at the moment?
Sunsuper’s purpose is to inspire and empower Australians to fulfil their retirement dreams. Whilst our team clearly focuses on delivering superior returns aligned with delivering on this purpose, supporting the fund’s overall member engagement effort to lift awareness of the drivers of retirement outcomes and what to expect along the journey is an important supplementary area of activity. Anything our team can be doing to get members engaged in their super as early as possible will not only benefit the fund, but also our members in retirement.
About the Awards
Other finalists in the CIO of the Year category at the 2018 Conexus Financial Superannuation Awards are Australian Ethical’s David Macri, AustralianSuper’s Mark Delaney, MLC’s Jonathan Armitage, and Statewide Super’s Con Michalakis.
The Conexus Financial Superannuation Awards recognise excellence in the industry and aim to encourage super funds to raise the bar in all aspects of their operations. The focus of the Awards is to honour funds that offer products and services that will ultimately lead to better retirement outcome for members.
Australian Prudential Regulation Authority (APRA) deputy chair Helen Rowell is a special adviser to the judging committee, which remains the only truly independent awards panel in the sector. For the 2018 awards, it has broad representation from all areas of the industry – including the retail and industry fund sectors – and consumer representation. This is complemented by the perspectives of two offshore chief investment officers.
The judging panel consists of CalSTRS chief investment officer Chris Ailman, FEAL chief executive Joanna Davison, CHOICE chief executive Alan Kirkland, Financial Services Council chief executive Sally Loane, Rice Warner chief executive Michael Rice, and former Minister for financial services and superannuation the Hon. Bernie Ripoll.
While there are many other awards nights on the industry calendar, the Conexus Financial Superannuation Awards are unique in that they are not aligned to a research or ratings house, and do not charge funds to participate.
The 2018 Conexus Financial Superannuation Awards are produced with thanks to platinum sponsor AIA Australia and event partner FEAL. All the winners will be announced at a special black-tie event on March 8 at the Ivy Ballroom, Sydney. Tickets are now available. To book, click here.