The $6 billion NSW Local Government Super (LGS) is up to due diligence on its first-ever active currency manager, has invested in a hedge fund beta strategy, and questioned whether it can continue to offer free financial advice to members following completion of the sale of its FuturePlus stake to Energy Industries Super Scheme.
Viva la reform: managers want reviews put into action
Australia’s proposed financial reforms will boost transparency, investor confidence and efficiency, a major survey of Australian funds managers and others active in the financial services industry, conducted by RBC Dexia Investor Services, has found.
Ankura gets nod as Russell seeks income
Russell Investments has allocated to BNY Mellon affiliate Ankura Capital for the first time, amid a host of new mandates supporting two new income-based multimanager funds for Australian equities and Australian bonds.
Find your place in evolving Asia
It’s an ambitious pitch that has as much likelihood of outrageous success as failure. Geoff Weir, head of the Financial Centre Task Force, will soon approach Asia-Pacific governments about establishing a multilateral ‘passport’ enabling the selling of managed funds in the region. This isn’t a plan to make Australia or any market a regional distribution hub: the collective undertaking aims to strengthen domestic industries by improving cross-border market access and letting them dictate the terms upon which the business of funds management is done in the region. This will be a long, hard slog for the task force.
Emerging markets: carve-outs on the rise
Australian institutional investors are increasingly carving out emerging markets coverage within their broad international equity portfolio, but there is little appetite yet for an ‘unconstrained’ approach to the asset class, according to Investec Asset Management. The South African-owned manager is well-placed to comment on buying patterns in the asset class, because its emerging markets capability grew out of its existing global equity team, following requests from clients. That means the 12-person global equity team, based in London, also runs Investec’s emerging markets and Asia ex- Japan funds, and as such does not subscribe to the need for analysts dotted around the globe.
Worldwide, hedgies wait for new mandates
Big institutional investors around the world are cautiously investing more capital in hedge funds over the next 12 months, with a view to increasing allocations over the longer term, according to a survey by the alternatives research firm Preqin. Preqin, which has offices in London and New York, surveyed 50 of the largest institutional investors in hedge funds during July and published a summary report in August. The report indicated a modest increase in support for hedge funds this year, with a more significant increase in later years. Clearly the possibility of a doubledip recession is weighing on the minds of investors in Europe and the US, as perhaps elsewhere. For hedge fund managers, the experience of the past two years of the global financial crisis caused them to become more reliant on institutional investor support, rather than its traditional base of high-net-worth individuals.
The art of dynamic asset allocation
There is no ideal asset allocation. This is because resources – particularly costs and knowledge – dictate that every fund’s position will be different, according to Carl Hess, global practice director of Towers Watson Investment. If Hess was starting with a blank slate, he would advocate about 10 different positions – from equities, to skill, to commodities – among return-seeking assets. “This is more diverse than anyone has been to date,” he says. “Good allocation has a lot to do with resources, internal and external, but if a fund is willing to raise the game, there are a lot of opportunities,” he said. Asset allocation depended on the time horizon of the investor, Hess said, explaining that an endowment with a long time horizon would be very different to a defined benefit fund that was riskaverse or is closing. But, he said, probably the most important criteria affecting appropriate asset allocation is resources.
Chris Cuffe’s call for a ‘target benefits scheme’
The Australian superannuation industry would resemble UniSuper if Chris Cuffe had the chance to build it from the ground up. In remarks made at the recent annual conference of the Fund Executives Association Ltd (FEAL), the builder of Colonial First State took it upon himself to mention a number of industry ‘elephants in the room’, one being most members’ compete lack of preparedness to take responsibility for investment decisions. Cuffe talked up the merits of a ‘target benefits scheme’, called a ‘collective defined contribution scheme’ in some countries, in which member benefits ascribed to a defined benefit-like formula, but the investment risk was borne by the collective membership rather than employers.
Heap of the top: meet UBS GAM’s new boss
Ben Heap was in Macquarie’s infrastructure team in the 1990s, working alongside Nick Moore and Michael Carapiet at the start of its “golden run”. He’ll be hoping he can bring some of the same magic to his new role running the Australian arm of UBS Global Asset Management (UBS GAM). Heap, who has spent almost all of his three years at UBS GAM running its infrastructure investment unit in New York, is taking over from Paul Bolinowsky, who is said to be relieved to again be focusing on institutional business development. Not surprisingly, infrastructure is near the top of the list of Heap’s immediate priorities for the Australian business.
For VFMC, alternatives boom in the gloom
The $34 billion Victorian Funds Management Corporation (VFMC) has reaped big rewards from its belief in the hedge fund managers it backed five or more years ago. In its latest performance figures, which show a headline return of 12.7 per cent against the 10.9 per cent gained by its benchmark in the year to June 30, VFMC’s absolute return and private equity portfolios were the standout performers. The absolute return portfolio boomed 27.1 per cent over the 5.9 per cent gained by its benchmark, the UBSA Bank Bill index plus 2 per cent annually, while its private equity book paced 26.5 per cent over the 13.05 per cent achieved by its benchmark, the ASX 300 Accumulation Index. Justin Arter, VFMC’s CEO, said the results were due to the “snap back” performance of its hedge fund managers, many of whom experienced substantial client redemptions at the height of the financial crisis.
