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Cbus targets further internalisation in new 5-year strategy

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The industry super fund is aiming to manage half of its assets in-house.

Cbus Super has unveiled a new five-year investment strategy in which the fund has set a target to manage 50 per cent of assets internally while also partnering on more major deals.

Kristian Fok, who was appointed acting chief executive officer of Cbus following the departure of Justin Arter, said that the fund was looking to build on the success of its previous five-year strategy which saw 38 per cent of asset management brought in-house, up from 9 per cent previously.

Since 2017, Cbus declared that it had delivered total investment fee savings of $512 million for its members through activities including internal strategies, external manager renegotiations, and asset allocation refinements.

“Our objective is to be an innovative global, long-term investor, with total portfolio expertise and a focus on investing in the real economy,” said Mr Fok.

According to Mr Fok, Cbus is at an advantage since it is able to use its existing teams to search for value without the need for costly and potentially risky investments in global offices.

The fund indicated that it is currently planning to focus on “smart partnering” rather than establishing a global footprint as part of the new five-year strategy.

“Global expansion was an important consideration as we developed the strategy and it’s become clear that it would provide limited value at this point in time,” Mr Fok said.

Mr Fok suggested that Cbus has a strong track record of partnering with global investors including Copenhagen Infrastructure Partners, the Dutch Infrastructure Fund, and Brookfield on significant investments for its members.

“And at this point, we are in a sweet spot where we are big enough that few deals are too large, and few deals are too small. This gives us great flexibility and makes us an attractive investment partner in a number of sectors,” he continued.

“We don’t need an office in an overseas city to find the right deals for members, so it’s not worth the expense and risk of setting up permanent bases. We will continue to make the most of the flexibility we have.”

Cbus acting chief investment officer Brett Chatfield said that building out the fund’s investment operations capabilities alongside the success of internal management had set a strong foundation for its total portfolio approach.

“The foundation of our investment capability is incredibly strong, which means the overwhelming majority of our efforts can be focused on getting the most out of markets,” he said.

“Extracting alpha will be critical going forward given broad market returns are likely to be more muted.”

Mr Chatfield also suggested that the successful implementation of Cbus’ previous strategy had provided the fund with flexibility regarding how future internalisation will be achieved.

“We are fairly agnostic as to where the next 12 per cent of internalisation will come from,” Mr Chatfield said.

“This is exciting because it means that we can be opportunistic in searching for talent. If the right manager wants to make a break and come over, we can make that happen.”

Earlier this week, Cbus chair Wayne Swan confirmed that the fund had successfully completed its merger with EISS Super. The super fund now manages the retirement savings of over $80 billion on behalf of 900,000 members.

Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.