VicSuper has named the five Australian equities managers to receive portions of an allocated $1 billion in new mandates, reflecting its commitment to a new investment structure.
AllianceBernstein’s Franked Australian Value Fund, Perpetual’s Australian Sustainable Shared Fund, Tribeca Investment Partners’ Smaller Companies Fund and SG Hiscock’s SGH20 fund each received a mandate of $165 million, while Vinva’s enhanced Australian Equities Fund fared best with an allocation of $330 million.
The super fund is utilising drawdowns from its existing mandates with the BlackRock Passive Australian Equities and SSgA Australian SAM Sustainability funds in providing the investment in the five new mandates. The recipient managers will now be included in VicSuper’s Australian Shares-only option, to be launched in early 2013.
“We’re pleased to add the expertise and diversity of this range of managers in order to further strengthen fund performance and achieve the best possible outcome for our members,” said VicSuper’s chief investment officer Oscar Fabian.
“Also, in line with our commitment to sustainability, all of the newly appointed managers integrate environmental, social and governance (ESG) factors into their investment process,” he added.
VicSuper says the issue of new mandates is part of a new “core plus satellite” investment structure – the result of an 18-month strategic investment review – which sees 60 per cent of the fund’s Australian equities in a ‘core’ passive or enhanced index, and the remaining 40 per cent in managed satellites.
The adoption of a new investment structure allows the satellite managers to be “highly active and benchmark unaware, with the aim of further improving the fund’s overall asset class performance,” said a statement released by VicSuper.
Moreover, the Victorian super fund – which manages more than $10 billion on behalf of 250,000 members – maintains that its review of its investment structure has caused it to be elevated to the top quartile in the Chant West Multi Manager Survey.
Speaking broadly on the benefits of this investment approach, the Singaporean investment arm of Swiss bank, UBS, advises that the core-satellite investment approach offers “flexibility in structuring your portfolios to meet long-term goals, as well as seize short-term opportunities.”
However, in a 2010 academic paper published in the American Journal of Performance Measurement, Ronald J Surz, president of California-based investment firm PPCA, wrote that “traditional core-satellite investing uses a version of core that overlaps the satellite managers, diluting their decisions.”
