Asia’s best asset owners: TCorp and CSC’s capabilities shine
The past few years have amply demonstrated why the world’s most successful asset owners combine process discipline with hard work, talented personnel and a willingness to embrace new opportunities.
Some of this year’s winners demonstrated global standards of sophistication and knowhow, while others have been expanding their capabilities amid increasingly unpredictable market conditions.
It was not easy to pick the winners. In addition to gaining self-nominations, we sought out the advice of some of the most talented and experienced advisers and consultants in the markets. And we invited a small panel of judges to volunteer their expertise and knowledge to assess applicants, and suggest their own. That still led to some highly competitive categories, in which we had to choose between impressive organisations.
These awards are a testament to the dedication with which the region’s best institutions take the management of their assets. As the world increasingly traverses a period of political uncertainty and inferior fixed rate returns, the need for investors to be nimble and open to new ideas will continue to mount.
Beginning with our explanations of the winners of our final, proficiency award winners, we explain why TCorp stood out for its drive to improve governance as it knits together multiple organisations and serves several clients, and how Commonwealth Superannuation Corporation impressed for its engaging approach to broaden its offering to members.
GOVERNANCE
TCorp
It can safely be said New South Wales government’s enlarged investment fund wants to be a top Australian investor. And it has spent four years refashioning itself to become so.
In 2015, TCorp was enlarged after it merged with NSW funds State Super and icare, to form a then A$70 billion asset owner. It then combined asset allocation and manager selection between the three, in consultation with Willis Towers Watson.
In 2017, it hired Stewart Brentnall from ANZ Wealth as its new chief investment officer (CIO) as part of a new phase: revamping its investment division, while it has been expanding the team from 35 to a targeted 55 as part of a centralisation of portfolio construction.
Controversially, it made many investment team members reapply for their jobs, and added several new senior roles to help TCorp better understand and respond to its various client needs in a consistent manner.
TCorp has expanded the investment team from 35 to a targeted 55 as part of a centralisation of portfolio construction
The new positions comprised of a head of investment advisory, who focuses on TCorp’s institutional client needs; a head of portfolio construction to decide on client portfolio characteristics; a head of exposure management to implement portfolios; and a head of partner selection who finds managers to meet portfolio construction ideas. It also dropped down from three custodians to one.
To oversee this overhaul, TCorp assembled a well-credentialled board of directors, including the chairman of Macquarie Bank, a former chief executive officer (CEO) of Westpac’s institutional bank, a former CEO of Schroders’ Australia operation, and the former head of FirstState Super.
The organisation seems to be benefiting from its years of labour. Its balance sheet was A$75 billion on June 30, while it has A$107 billion in funds under management, up nearly A$40 billion in four years as it has attracted new investors. Some of its funds are good performers too; its long term growth fund made 13.21% in 2018, and an annualised 10.53% over seven years, for example.
INNOVATION
Commonwealth Superannuation Corporation
The superannuation fund for Australia’s military personnel and bureaucrats, CSC has to cater to a varied set of members. The A$44.2 billion asset owner has found the best way to do so is to be as clear about what it does and how it can help its savers put their money away.
Its efforts to lead the market in clarity of decision-making helped net it AsianInvestor’s Governance award in 2018. Now the super fund is looking to add capabilities that let it give different tailored investment options for its various default defined contribution customers.
Even more notable was CSC’s creation and growth of a seed programme. This programme was established in 2017, and gives the super’s customers the option to access quality investment specialists for relatively low costs.
The idea is to give access to such specialists for relatively low costs by using CSC as the conduit, which may help them earn higher net risk-adjusted returns in public markets. That’s the sort of option that members of other super funds do not enjoy.
CSC began the programme in early 2017 and has since implemented its strategy for public hedge funds; it currently covers five managers.
In addition, the super is expanding its capabilities in alternative asset areas. The fund is already a direct or co-investor in a set of properties and infrastructure, including the Indooroopilly Shopping Centre and Canberra Data Centre, while it has recently established the tools to conduct co-investments alongside its private equity and property partners.
CSC is planning to appoint a specialist global co-investment adviser to help it do so, as well as hiring two investment team members with alternatives investing experience.