At a time when Asia Pacific’s pension funds need to modernise, expand and improve, having high calibre professionals in key roles will be vitally important.
For that reason, AsianInvestor has consulted leading pension fund experts, consultants, custodians and fund managers to put together a list of 20 pension executives who stand out in their field. The list which is being rolled out online over the next week and a half, is not ranked. Nor is it intended to be exhaustive. But hopefully it highlights why these particular executives in the region have so impressed their peers, business partners and colleagues.
You can also find out more about the rationale for our list. Today, we move on to executives from Australia and Japan.
Chief investment officer, Hostplus, Australia
Ever since he joined the now A$30 billion ($23.6 billion) superannuation fund in 2008, Sicilia has sought to take advantage of the fact it supports the pensions of nearly 1 million relatively young hospitality industry employees.
Because contributors are younger, with an average age of around 33, they have more time to save for retirement. That allows Sicilia to add extra risk to its portfolio to improve returns, with the proviso any hiccups will make little difference over the long run.
As part of this philosophy Sicilia has made forays into infrastructure investments (he is seeking to raise its exposure from about 10% to 12% of AUM), favouring the reliable way such assets throw off cash. Other investment forays under Sicilia have included offering asset mandates into private equity areas including into China and tripling its investments into venture capital.
Sicilia was most recently an outright bull on stocks, arguing they are one of the few places in which it is possible to enjoy a decent return on investment.
Plus Sicilia’s embrace of risk included Hostplus taking advantage of the global equities rally last year to ensure it boasted a 13.2% return for the 12 months to July 2017, placing it among the top five funds for the period. The fund returned 11.3% for the five years to December 31, 2017, marking it as the best-performing super fund over that time frame.
“Hostplus takes more risk and has gained better investment returns as a result of Sam Sicilia; he’s always been top of the pops from an investment point of view, largely due to his risk attitude,” said a head of institutional sales for Australia at an international fund house.
Admirers note Sicilia can lean on extensive experience from a consulting career that dates back to the early 1990s. Sicilia was previously a director of investments at Russell Investments, and a senior manager of Bank of Ireland Asset Management. He has also worked as a consultant with Frontier Investment Consulting and Towers Perrin.
Sicilia also boasts a doctorate in mathematical physics. He seems to take an exploratory but analytical approach to heart when it comes to investing.
Senior adviser and former chief investment officer, Secom Pension Fund, Japan
The Japanese government’s desire to instil better investment practices and corporate stewardship has been something of a battle against the country’s entrenched corporate culture.
For decades, local institutions were unquestioning investors in local companies. For cultural reasons, CIOs of company pension funds in particular didn’t want to tell company CEOs (some of whom might be on the same overall group) how to do their jobs. Unfortunately that has sometimes allowed bad practices to go unchallenged, and hit returns.
Shinzo Abe’ government has sought to change this, introducing a stewardship code in 2014. Four years later, no company pension funds have signed up to it—except for Secom Pension Fund.
The willingness of the ¥90 billion ($835.7 million) pension fund to do so was because of its (now) former head of investment, Hiroichi Yagi. In addition, he ensured Secom was Japan’s only financial institution to date to agree to the principles for responsible investment of UN PRI, following in the footsteps of GPIF in embracing environmental, social and governance standards when investing.
For Yagi, these steps sit well with his unusual focus on heavy stock investments—which also makes him unusual among corporate pension peers. As he has explained, well-governed companies are most likely to avoid scandal and recover fast from market corrections.
This attitude meant Secom has invested into stocks even when peers hid from market shocks in low yielding bonds. Secom had a 40% position in local stocks and another 6% in overseas shares, as of last year. Plus, Yagi steered the fund into other unusual asset classes, say local fund house salespeople.
“Secom has a unique investment style; they prefer to invest into distressed assets and insurance-linked securities,” said the head of institutional sales at one international fund manager. “They were one of the earliest entrants into this space and their aggressive investment style means the pension fund has overfunded its liabilities twice-over. That’s an accomplishment down to Yagi-san.”
Yagi, 65, stepped down as CIO at the end of 2017, but remains a senior adviser to the fund he has done so much to shepherd. Yagi’s success offers conservative CIOs something to consider.