The AMP Capital Investors ‘Future Directions’ diversified funds have “come off the sidelines” on alternative investments, with investment director Sean Henaghan flagging a build-up to 15 per cent over the next two years. Henaghan declared that potential returns on alternative investments were finally compensating the long periods of illiquidity they demanded, and revealed that Future Directions’ private equity adviser, San Diego’s StepStone Group, had placed the vehicles with three primary private equity managers since their relationship began in January. “If you look at the best times historically to have bought private equity, it was ’92, 2001/2, and I think this vintage will be a similar story – you’re buying companies at two or three times EBITDA that were asking nine or ten times a couple of years ago.”
AMP Future Directions to treble alternatives
The AMP Capital Investors ‘Future Directions’ diversified funds have “come off the sidelines” on alternative investments, with investment director Sean Henaghan flagging a build-up to 15 per cent over the next two years. Henaghan declared that potential returns on alternative investments were finally compensating the long periods of illiquidity they demanded, and revealed that Future Directions’ private equity adviser, San Diego’s StepStone Group, had placed the vehicles with three primary private equity managers since their relationship began in January. “If you look at the best times historically to have bought private equity, it was ’92, 2001/2, and I think this vintage will be a similar story – you’re buying companies at two or three times EBITDA that were asking nine or ten times a couple of years ago.”
Escrow could be the wary investor’s friend
Escrow has emerged as a potential risk management tool for super funds doing direct investment deals in infrastructure and private equity in an environment where counterparty risk is front of mind. Escrow can be used by buyers and sellers of assets where price uncertainty or counterparty risk exists, and is typically used to help settle large investments or merger and acquisition deals. Victor Penna, head of product, treasury services at JP Morgan, said escrow could be used by super funds investing in infrastructure projects such as public private partnerships (PPPs) or toll roads, where the value of the asset is contingent on future performance.
Escrow could be the wary investor’s friend
Escrow has emerged as a potential risk management tool for super funds doing direct investment deals in infrastructure and private equity in an environment where counterparty risk is front of mind. Escrow can be used by buyers and sellers of assets where price uncertainty or counterparty risk exists, and is typically used to help settle large investments or merger and acquisition deals. Victor Penna, head of product, treasury services at JP Morgan, said escrow could be used by super funds investing in infrastructure projects such as public private partnerships (PPPs) or toll roads, where the value of the asset is contingent on future performance.
Longevity risk a commercial threat to super funds
Industry funds risk losing a lucrative part of their membership base if they do not address the commercial threat posed by longevity risk, the head of Macquarie Funds Group’s new longevity solutions team has warned. Andrew Robertson, head of MFG Longevity Solutions and formerly founder of boutique consultancy Ingevity, said the over 50s demographic, which typically have higher account balances and are the most profitable of industry funds’ members, would be an obvious target for retail funds that manage to develop sophisticated longevity risk solutions for retirees. He believes super funds have a role to play in underwriting the longevity risk of their members by pooling that risk and offering guarantees backed by financial institutions, but face challenges in building solutions.
Longevity risk a commercial threat to super funds
Industry funds risk losing a lucrative part of their membership base if they do not address the commercial threat posed by longevity risk, the head of Macquarie Funds Group’s new longevity solutions team has warned. Andrew Robertson, head of MFG Longevity Solutions and formerly founder of boutique consultancy Ingevity, said the over 50s demographic, which typically have higher account balances and are the most profitable of industry funds’ members, would be an obvious target for retail funds that manage to develop sophisticated longevity risk solutions for retirees. He believes super funds have a role to play in underwriting the longevity risk of their members by pooling that risk and offering guarantees backed by financial institutions, but face challenges in building solutions.
Sole purpose test does not apply to trauma: Prime Super
Prime Super’s move to offer trauma insurance to members as an additional product alongside the fund’s investment options was not required to meet the sole purpose test because the fund was the distributor, not the manufacturer, of the policies. An I&T News story covering Prime’s trauma insurance offering, published in late July, drew responses from industry executives questioning how the fund justified the product under the terms set by the sole purpose test, in section 62 of the Superannuation Industry (Supervision) Act,1993. Lachlan Baird, chief executive officer of Prime, said the product was not required to meet the sole purpose test because the fund distributed the product only. “It’s not out product,” Baird said.
Sole purpose test does not apply to trauma: Prime Super
Prime Super’s move to offer trauma insurance to members as an additional product alongside the fund’s investment options was not required to meet the sole purpose test because the fund was the distributor, not the manufacturer, of the policies. An I&T News story covering Prime’s trauma insurance offering, published in late July, drew responses from industry executives questioning how the fund justified the product under the terms set by the sole purpose test, in section 62 of the Superannuation Industry (Supervision) Act,1993. Lachlan Baird, chief executive officer of Prime, said the product was not required to meet the sole purpose test because the fund distributed the product only. “It’s not out product,” Baird said.
Absolute Returns Funds Conference 2009 Speakers
Gregor Andrade joined AQR in May 2003 and is a senior member of the Client Strategies team and Principal of the firm. Prior to joining AQR, Gregor was a finance professor at Harvard Business School. He taught Corporate Financial Management (CFM), an advanced Corporate Finance and Valuation course in the MBA program, as well … Read more
Absolute Returns Funds Conference Program 2009
8.30am Registration 8.50am Welcome and introductions, Colin Tate, executive director Conexus Financial 8.55am Kim Ivey, Chair, Alternative Investment Management Association, Australian Chapter Session Chair Rob Goodlad, managing director, State Street Global Advisors 9.00am How the world’s most sophisticated investors are pursuing absolute returns – Greg Moessing, managing director, Cambridge Associates 9.35am A statistical snapshot of … Read more
HOSTPLUS to incubate in emerging, frontier markets
The $7 billion HOSTPLUS aims to expand its incubation program to include emerging global equities managers and is eyeing opportunities for co-investments with other institutional funds in the unlisted sectors of frontier markets. Sam Sicilia, chief investment officer with the industry fund, said he was working with asset consultant JANA Investment Advisers on developing a global equity manager incubation program similar to that run for domestic managers. “The case for an international program is good as it’s no harder and we could be beneficiaries from it,” Sicilia said. Before joining HOSTPLUS, Sicilia worked as an asset consultant for 15 years with Towers Perrin, Frontier Investment Consulting and Russell. He was confident that JANA was capable of assessing offshore managers from an Australian base.
HOSTPLUS to incubate in emerging, frontier markets
The $7 billion HOSTPLUS aims to expand its incubation program to include emerging global equities managers and is eyeing opportunities for co-investments with other institutional funds in the unlisted sectors of frontier markets. Sam Sicilia, chief investment officer with the industry fund, said he was working with asset consultant JANA Investment Advisers on developing a global equity manager incubation program similar to that run for domestic managers. “The case for an international program is good as it’s no harder and we could be beneficiaries from it,” Sicilia said. Before joining HOSTPLUS, Sicilia worked as an asset consultant for 15 years with Towers Perrin, Frontier Investment Consulting and Russell. He was confident that JANA was capable of assessing offshore managers from an Australian base.
