In an environment where markets are becoming ever more concentrated, the $21 billion Team Super is happy to wear plenty of active risk from its managers and won’t use overlays to make up for underperformance.

Team Super CIO Seamus Collins told Investment Magazine’s CIO Series that the fund has maintained its decades-long relationship with Hyperion Asset Management, even through the extreme volatility of the last few years, because the manager’s clear-minded approach to its strategy.

“We’ve had Hyperion for close on 25 years,” Collins said. “They’re one of our highest conviction, longest-tenured managers, and they’ve done extraordinarily well for us over the long term.

“They had an extraordinary level of impact over 2025 and into 2026 on the SaaSpocalypse and various other things, but what was really important to us is that they’d always been really open about the concentration risk and active risk in the strategy and about what their philosophy was.”

Collins pointed to CBA as another case where nearly every manager “couldn’t cope with the disconnect between the fundamentals of the stock and where its price was going”.

“How do you deal with a situation where every signal is flashing red and you’re getting absolutely gapped out and the tracking error on the portfolio is starting to get way, way beyond what your forward guidance was?”

While a number of super funds have responded to problems around concentration and active risk by applying overlays to their portfolios, essentially trading against their own managers, Collins said that, while he and the investment team considered the approach prudent in some situations, they were “uncomfortable” with doing the same.

“Asset managers couldn’t see how they were all lining up on one side of the boat, and they couldn’t see that the boat was [tipping] because they weren’t seeing what everyone else is doing. It was only when you pulled back and could see everyone was on one side that you could make a reasonable risk decision.

“But to some extent we agreed with our active managers. We were looking at it as well and asking, ‘how can this company be trading on a bigger forward multiple than an early stage fintech with no revenue?’ It just didn’t make any sense.”

Something else to consider is how big, market-moving events can linger in the memory of asset managers and owners and continue to shape their behaviour even when the market regime changes.

“Our fund went through an experience where we had a long period where the find had a bias to conservatism, and that bias was informed by going through the GFC with quite a conservative growth profile. The fund came out of that experience convinced of the wisdom of that course of action, and then over the decade of recovery really did lag in some ways.”

Team Super ultimately had a “come to Jesus” moment where it stopped betting against the S&P500, Collins said, adding that it was fine to lag markets when you’ve made a conscious decision to do so but not when it’s because of an unconscious bias or defence mechanism.

“People are informed by the big events in their work experience and what worked for them once, and they anchor,” Collins said. “The other big one is when they were a superstar. When was I great? What was the moment where everyone turned to me and said ‘that was correct’? Both of those impact future behaviour, and I see it in our own fund – the moment we were great, and the moment we were scarred.”