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‘A long-term game’: How this fund is seeing results from in-house investment

By Sarah Kendell
2 minute read

As the trend towards bringing investment teams in-house continues, a major industry fund has credited its record performance for the 2021 financial year to increasing efficiencies and sharper reactions to market swings as it jettisons external managers.

Construction industry fund Cbus, which manages $63 billion on behalf of 770,000 members, revealed it had generated a 19.34 per cent return for its growth option in FY21, the best annual performance figures in the fund’s 37-year history.

Cbus, which has moved to managing 35 per cent of member investments in-house, also picked up former APRA head of investment risk Mark Ferguson as its new head of total portfolio management this week, in what the fund said was another plank in the implementation of its internalised investment structure.

“Mark brings particularly strong expertise in currency, asset allocation process design, risk management, and overlay management. Alongside extensive experience in investments strategy, superannuation and with regulation, providing a unique perspective for Cbus,” the fund’s chief investment officer Kristian Fok said.

“This appointment further strengthens Cbus’ overall investment capability and continues our strategy to build our level of expertise in-house. This enables Cbus to respond quickly to opportunities and negotiate directly for the best investment outcomes for our members.”

Mr Fok told InvestorDaily the fund’s results were “the story of having the right people and processes in place” as it increasingly moved resources in-house.

Cbus had saved around $400 million in investment fees since 2017 and seen management costs fall by 8 per cent over the past 12 months as its internalisation strategy progressed – but the benefits were also around the expertise and skill sets that in-house investment teams brought to the fund, Mr Fok said.

“The market insights that we gain from our internal teams are just as important as the financial benefits,” he said.

With the government’s new reforms set to right what financial services minister Jane Hume calls “the unlucky lottery of superannuation” and weed out dud funds from the default system, Mr Fok said it was more critical than ever that the super sector think seriously about scale and efficiency.

“Increasing scale and reducing investment costs is so important,” he said. 

“Superannuation is a long-term game and the gains members see from fee savings will compound over time.”