Andrew Lill

REST chief investment officer Andrew Lill is under no illusions that the fund must work hard to retain its members. 

According to the annual fund-level data released by APRA this month, the $75 billion retail workers’ industry fund serves the nation’s third-largest member base with 2 million accounts, right after mega-funds AustralianSuper (3.2 million) and Australian Retirement Trust (2.3 million). 

The figure is noteworthy considering REST’s total assets under management (AUM) is less than a third of AusSuper and ART.  

But Lill says he does not consider the fund’s large member base a given, with increasingly competitive dynamics creeping into the market.  

“The reality is that at any point our members can take their money elsewhere, we know we operate in choice environment for super in Australia,” he tells Investment Magazine.  

“We’re not close minded enough to think that the [members’] money will always be there, it’ll only be there if we’re doing the right job for them in the long term.” 

Due to a similarly young membership composition and the benefits it receives from the default system, REST is often placed in juxtaposition to Hostplus when it comes to fund operations.  

However, the latter’s outspoken CIO Sam Sicilia has baked in a more optimistic assessment of cashflow dynamics, because thanks to its young members, there is “a lot of money coming into the fund and not a lot of money leaving it”, he said after declaring that he “doesn’t care” about a lot of the macroeconomic and geopolitical uncertainties at Fiduciary Investors Symposium last month.  

Lill declines to comment directly on Sicilia’s statement but says a young membership base means different things to REST.  

“Most of our members are aged under 34, and they will be retiring into a post-2080 world, so considerations around climate and social equality are all very important to us. 

“And we think we drive returns in that environment, so it’s a long-term investing horizon, but it’s one that’s very thoughtful as to what we think will be the major drivers post-2050.” 

Sign up to the culture 

REST capped off the year with a slew of new hires and among them was a new head of internal global equities, Richard Mercado, hailing from asset manager Comgest’s Paris office. The in-house team now oversees Australian fixed income, Australian equities, real estate and infrastructure.  

Lill says the talent’s compatibility with the fund internal investment culture is non-negotiable – a conviction that has guided him in developing a whole-of-fund investment strategy for REST at the beginning of his tenure.  

“We’re not looking for sort of any old process, we’re looking for particular process that fits in our portfolio,” he says.  

“We offer our clients multi asset portfolios – we’re not here to sell single asset class capabilities. 

“We are very clear that we are bringing people to work in the investment team of a super fund, and what goes with that is signing up to the culture.” 

The fund currently has an internalisation rate that’s just short of 20 per cent. As it prepares to cross the $100 billion FUM threshold in the next two years, Lill says 15 to 25 per cent is a comfortable range.  

“There’s no point setting in our mind an internal target, if we don’t feel like the quality of the internal teams that we have is at the upper end of the range. 

“We’re not doing it purely for competitive fees. We’re doing it for a combination of competitive fees and competitive returns.” 

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