Active? Passive? Or door No. 3?
Senior portfolio manager of equities at Cbus Super, Anna Weickart, said choosing an active or passive investment approach shouldn’t depend on the environment but on governance and an ability to find skilled managers.
“If you don’t have the governance and resourcing in place to manage, select and appoint those active managers, it’s going to be difficult,” Weickart said. “We think we do have some skill in identifying some active managers but we’re specific where we look. We look at asset classes that we think are more inefficient and I’d put emerging markets and small cap in there.
“We have tilt to specialist small cap and also emerging markets. In emerging markets, we used to have a passive component that was more for asset allocation purposes but have taken that out and are able to invest in futures. We’re now all active with high specialist skilled managers.
“We did add a smart beta with a value momentum [strategy]. We were looking to be complementary to our existing bottom-up quality managers.”
Speaking on a panel at the Fiduciary Investors Symposium in the Blue Mountains in May, Weickart said Cbus moved into smart beta due to capacity constraints with some managers and for better fees.
Head of investment strategy at CommInsure, Craig Lamb, said the traditional approach to equity investing for a multi-sector fund had been to decide on strategic asset allocation between passive and active; however, a newer approach is to take a more holistic view and to focus on achieving underlying client objectives. This is the approach CommInsure tries to take, Lamb said.
He said CommInsure thought about three components for equity risk premia: pure equity risk, factor exposure and illiquidity premia.
“When you break it down that way, thinking about the sources of risk premia, you get some quite interesting investment solutions,” Lamb said.
Chief product officer at CFM, Laurent Laloux, said nowadays there’s a nice middle ground in the alternative beta space.
“That’s why they’re interesting to a lot of pension fund investors, because they are a significant size that they can bring diversification to a portfolio on top of the existing beta allocation,” Laloux said.