Dr Manny Pohl, who set up EC Pohl & Co after leaving Hyperion Asset Management in April 2012, said that unless there is a “material event” within the fund manager, the superannuation fund should commit to the full term of the mandate.
“If you’re appointing a manager to manage money over the longer term, the terms of that arrangement should reflect the long-term nature of what you want them to do,” said Mr Pohl.
While he acknowledged superannuation funds are entitled to cancel the mandate of a boutique firm if a key person leaves the company, Mr Pohl said those things can be “written into the contract”.
Mr Pohl has spent much of the last year raising funds for EC Pohl & Co Private Equity, which will invest in mid-market Australian companies – so he admitted he hasn't seen mandates that were written in the past 12 months.
“But certainly prior to that they were all on 24-hour notice. The mandate could be terminated in 24 hours – and that just isn’t an alignment of interests,” he said.
Superannuation funds should commit to a long-term relationship provided “nothing happens at the [fund] manager”, said Mr Pohl.
“If the team are there and everything’s still in place, you should be backing them for the five-year period because that’s the period you want them to manage the money over,” he said.
That said, all of the mandates Mr Pohl has been involved in have seen the fund manager given a “five-year shot at it”, he said – “it's just that the legal agreement doesn't reflect that”.
“So [superannuation funds] actually do show long-term thinking, but it’s just a mismatch between the contract and what people are actually doing,” said Mr Pohl.
