All super funds have one thing which should give them a natural advantage over other investors: a long-term – sometimes very long – investment horizon. But Sonya Sawtell-Rickson, chief investment officer of the $96 billion health industry super fund HESTA, says it’s not obvious to her that all funds capitalise equally well on that advantage.

Sawtell-Rickson joined HESTA as CIO eight years ago. At the time, the fund was taking steps towards a total portfolio approach (TPA) and was about tointernalise some of its investment management capabilities.

She says the long-term nature of superannuation investing is an ideal environment for both TPA and for integrating factors such as responsible investment into how it manages its members’ money. She says it ties in closely with the fund’s objective of investing “in and for people who make our world better”.

“That shapes how we think about risk, how we think about return, and how we think about long-term value creation,” Sawtell-Rickson says.

“When we’re going to market, looking at investment excellence and impact, we want to be making sure that we’re thinking long-term about how we can accelerate our investment capital to generate performance for our members aligned with their horizon and delivering their outcomes, which is really trying to align behind contributing to a more sustainable world.

“I think that matters. It means that everybody, every day, is coming back to what matters most for our members, the horizon of our members, and is really committed to, through our total portfolio approach, coming together to try and solve hard things. Culturally, we’re up for that.”

Sawtell-Rickson says that approach has been vindicated by returns for its 1.05 million members – Chant West analysis shows the HESTA Balanced Growth MySuper default option has returned 7.6 per cent a year for the 10 years ended 30 June 2025 – and in conversations the fund has with the companies it invests in, which praise it for its “joined-up” thinking on investment issues.

But she says it’s not obvious to her that all funds are cashing in equally on the advantage they enjoy.

“Superannuation is a long-term pool of capital; all superannuation funds should have that advantage,” Sawtell-Rickson says.

“I don’t think all super funds utilise it, necessarily, and I’ll give you an example: our dynamic asset allocation process is designed to be a medium-term forecast of where we think returns, risks and correlations may evolve to. We believe, by focusing on that horizon, it improves the accuracy of those forecasts and also improves the resilience of our portfolio, because we can better manage the potential downside risks that are emerging.”

Discipline

The approach requires some discipline, Sawtell-Rickson says. It can mean being counter cyclical, “which is [that] you want to be fearful when others are greedy and lean in when others are fearful” and that “you can have losses while you wait for markets to reprice”.

“That requires patience and discipline and I’m not sure that all investors have that patience and discipline to really go after their advantage,” she says.

TPA wasn’t new to Sawtell-Rickson, whose career included 16 years at QSuper and Queensland Investment Corporation before joining HESTA. When she arrived at the fund TPA was “very much part of the philosophy that they were leaning towards implementing and really very strongly [believed] that a TPA approach would add significant value in terms of performance and resilience but also enabling us to incorporate and be more authentic to our purpose”.

“It was very much a core plank of how we built our investment process,” she says.

“We had that opportunity as we were internalising our strategy process and think deeply about, how do we design an organisation to go after TPA and really make it a comparative advantage.”

Internalising investment management isn’t necessarily a precondition for successful TPA, but Sawtell-Rickson says it has helped, and that it brings a dimension to investing that being 100 per cent outsourced might otherwise lack.

“You could do it without [internalisation], you can do it with it. If you’re doing it without it, you’re probably leaning more heavily on third parties to try and capture insights and information,” she says.

“We think our hybrid model of having great talent in our building actually makes us a better partner with our external managers. They actually really love debating and talking to people who deeply understand what they do.

“The quality of conversation of somebody who has managed money and run an investment process talking to somebody else who is doing the same is just higher than somebody who’s never done those things. So we actually think having this hybrid makes us better partners and makes people enjoy working with us more.”

Strategic objectives

About 18 per cent of HESTA members’ assets are managed internally, primarily domestic fixed income and equities, and cash. Sawtell-Rickson says HESTA was seeking to address a number of strategic objectives when it set about internalising investment management capability.

“The first was really access to capability and getting closer to markets, really being able to effectively afford to have a team in the building, at no net cost, that gave us access to this new, deep capability that we could leverage into our research and insights process. And that’s been incredibly successful,” she says.

“That’s step one.”

“Step two would be really getting better at our corporate engagement as well. We believe we should and must integrate responsible investment, and we do that in our investment process, but we also want to do that in our company engagement.”

Sawtell-Rickson says she wants to make sure that when members of HESTA’s investment team are talking to companies, they’re able to talk about “business strategy, financial outcomes [and] risk management, and RI is just part of those conversations”. “We don’t want to have RI as a separate conversation to our business conversation,” she says.

“Having an internal team has really helped [us] leapfrog in that area. One of my favourite things when I talk to company executives is they tell me that HESTA is the most joined-up. They hear a really consistent story. They tell me it’s really integrated in the conversation on the things that matter. And I love hearing that.”