AustralianSuper will review all of Westscheme's service providers as part of the due diligence process for the proposed merger of the two superannuation funds, AustralianSuper chief executive Ian Silk has said.
Australia's biggest superannuation fund will conduct due diligence over the next three months, after which it will decide whether or not to retain any of Westscheme's current providers.
"We've got to look at a whole range of issues throughout the due diligence. All services providers, and that includes investment managers, will be on the table for consideration for retention or otherwise," Silk said.
Although AustralianSuper is planning to set up a separate division to service Westscheme's members, the West Australian super fund's assets will be transferred to AustralianSuper when the merger becomes effective on 1 July.
"The Westscheme assets will be transferred to AustralianSuper. They will be part of one single portfolio of assets," Silk said.
Westscheme, which uses Access Capital Advisers as its asset consultant, has had some relatively poor investment performances in recent years.
The fund's default option, the Trustee's Selection, experienced larger losses than similar funds during the global financial crisis because it did not hold any bonds and only a small amount of cash.
In 2007, Westscheme also increased its exposure to collateralised debt obligations - complex derivative products that lost most of their value during the crisis.
Silk said changes to Westscheme's investments were likely, but pointed out it was too early to tell where they would take place as the funds had only just signed a memorandum of understanding.
"The due diligence process will give us an opportunity to become better acquainted with the assets in the Westscheme portfolio and decide what will be the appropriate action in relation to each of those assets," he said.
The review comes after Westscheme only just concluded an overhaul of its $970 million Australian equities mandates, terminating BlackRock and Barcalys Global Investors as managers, while appointing Bennelong Australian Equity Partners, Macquarie Funds Group, BNY Mellon-affiliated Ankura Capital and Colonial First State Asset Management.
Changes are less likely in the fund's insurance and administration providers as the two funds share the same providers: Tower and SuperPartners.
