The $150 billion Aware Super is targeting to nearly double its 115 strong investment team to manage half of its asset book by 2027 and build a significant presence in London as part of its strategy to diversify its exposure from Australia.
“The Australian market, with its size, is obviously quite saturated and we’ve got good exposure here,” Aware Super CIO Damian Graham tells Investment Magazine.
“There is a very large market globally we can tap into. We want to keep diversifying geographically to get different assets with different counter parties and different dynamics.”
Aware is expecting its asset base to increase by an additional $100 billion by 2027. To support the expected growth in funds under management, deputy chief investment officer Damien Webb will be relocating to London by Christmas with an initial team of 10-12 to grow its direct investment strategy in private equity, property and infrastructure in the UK, Europe and the US.
Aware joins a growing number of Australian super funds like AustralianSuper and QIC to expand globally, hampered by the smaller size of the local market. Australia’s assets to GDP ratio around of 124 per cent is higher than other countries such as the US, UK and Japan according to research by the Thinking Ahead Institute.
“We’re definitely looking to invest directly and for private equity, we’re looking to maximise our current relationships which we have with a lot of general partners we deal with,” Graham says.
The goal is to expand the London office to 30-40 people in three to four years and nearly double the 115-strong investment team in that same period.
Aware has also created two new senior roles as the asset book grows – a chief operating officer for investments and a head of portfolio management to bring together key growth sectors such as private equity, property, infrastructure and public equities.
Cost-effective for members
Graham maintains the direct investing strategy is more cost effective for members, notwithstanding the complexity of managing a higher proportion of assets internally. “We believe [the cost benefit] is strongly biased towards what we are trying to do because of the embedded cost in fund managers and performance related fees.”
However, he recognises the fund needs time to build up brand recognition and credibility in order to attract talent. “From an economic perspective, we think it makes sense but we’ve got to be able to attract and retain good people. That’s a key focus,” he says.
Aware is keen to deepen relationships with other global funds to co-invest as part of its strategy to build out the asset book.
“We’ve built up some good exposure to different assets in different markets with particular funds, so we want to replicate that approach with other funds because partnership with big funds has been really useful,” Graham says.