Cbus’ internalisation successes to date have inspired the fund to bolster its internal investment capabilities with the appointment of Ryan Riedler as head of ASX core strategy, Australian equities.
At 30 June 2024, 34 per cent of Cbus’ investment portfolio was managed internally, with the fund aiming to grow this to 50 per cent within three years, it said in a statement on Thursday.
“The shift to a higher level of internalisation has delivered strong results for members, including contributing to an overall saving of investment fee and cost savings of more than $1 billion since 2018,” said Leigh Gavin, head of portfolio strategy.
“We will continue to look at ways we can bring further strategies in-house as part of Cbus’ five-year investment strategy.”
Riedler’s appointment is also considered “critical” for the continued evolution of the $100 billion fund’s Australian equities strategy.
“This new domestic fundamental strategy is the next step for Cbus, having in recent years established a suite of fundamental and quantitative internal equities capabilities in domestic and global equities,” Gavin said.
“This new strategy has relatively few capacity constraints and can, over time, be a multibillion dollar strategy that is central to the overall Australian equities portfolio.”
Riedler, who previously spent 14 years at Cooper Investors, will be in charge of developing, implementing and overseeing the investment strategy for the new ASX Core portfolio, which is complementary to the fund’s existing internal Australian equities capabilities.
Cbus, which has faced considerable criticism in recent months over its links to the Construction, Forestry and Maritime Employees Union, returned 7.8 per cent p.a. over the 10 years to 31 December 2024.
The superannuation industry has been trending towards fewer and larger super funds with increased investment insourcing, having found that internalisation lends itself to growth and strong long-term performance.
Cbus launched its five-year strategy in 2023, telling InvestorDaily’s sister brand, Super Review, last year that the move had yielded a considerable decrease in investment fees in just over a year.
At the time, the fund’s chief investment officer, Brett Chatfield, said external managers, too, remain important for diversification purposes, ensuring the fund is not overly exposed to one style or factor.
“We will continue to build a diversity of different styles and approaches and, historically, we’ve had that by using external managers, which we still have, but we would like to have diversity in different styles and approaches within our internal team as well,” he said at the time.
Having caught wind of the trend, Morningstar last year ran a survey that found insourcing is “by no means the only way forward”, with funds largely keeping the door open to external managers and asset consultants.
All Australian Prudential Regulation Authority-regulated funds use external managers, the research house found, and the overwhelming majority of profit-to-member funds – over 90 per cent, account for over $1.4 trillion in assets – continue to engage external asset consultants.
