The Chant West Awards presentation, taking place via live video feed on May 14, includes a focus on the long-term sustainability of super funds and the way they invest. There has probably been no better year to adopt such a theme, with the summer from hell being followed by a global health and subsequent financial crisis.
But sustainability of investments goes far beyond the standard ESG issues as it considers setting up a fund’s investments so that it can weather all sorts of market conditions and deliver strong long-term performance for members, according to Ian Fryer, Chant West head of research, and Mano Mohankumar, the firm’s senior investment research manager.
They say that in assessing the investment component of the consideration for the two major awards – Fund of the Year and Pension of the Year – that Chant West has long maintained that there is no single best approach to investments.
“Indeed, very different investment models can all deliver strong investment outcomes for members over the long term. This is clearly illustrated by the four funds that have dominated our main awards in recent years.” (See the mini profiles of those funds in the separate report this edition.)
This year, each of the finalists has delivered strong long-term performance, but they tended to get to that level of success by different pathways. Of the four showcased for this preview report (which doesn’t necessarily mean they will take out a main award this year), they say:
- AustralianSuper has a large investment team comprising about 170 front-office investment staff. It has a strategic commitment to its global unlisted asset program and has 25 per cent in unlisted property, unlisted infrastructure and private equity with an additional 5 per cent invested in mid-risk credit. It has built up a strong internal management capability and now manages over 40 per cent of assets directly. Growing its global presence is key to accessing the high-quality unlisted assets it seeks to invest in.
- QSuper has an investment team of about 45. It has a unique approach to managing risk. It also has a meaningful allocation to unlisted assets, but to further smooth out returns it has a much lower allocation to listed equities – 29 per cent in its ‘balanced’ option going into the recent downturn versus about 53 per cent for its peers. The difference was made up of about 25 per cent in long-duration bonds that have equity-like risk but tend to be a better diversifier against equity market falls than traditional bonds.
- Sunsuper has about 40 front-office investment staff. It uses JANA Investment Advisers as its primary consultant and also uses specialist consultants for some asset classes. It has a strategic commitment to its global unlisted asset program with 26 per cent in unlisted property, unlisted infrastructure and private equity in its MySuper. It also has a further 6 per cent invested in hedge funds and other alternatives.
- UniSuper has an investment team of about 55. It has a strong focus on listed markets as that is the area of expertise of its experienced team. It gains exposure to property and infrastructure mainly by taking large stakes in listed vehicles. This is unique for an industry fund. Its MySuper default option has only 7 per cent in unlisted assets. It believes the listed market route has enabled it to opportunistically build a portfolio of high-quality property and infrastructure assets at a lower price.