By Penny Pryor
MELBOURNE, Australia — Officials at the A$18 billion ($13.6 billion) Future Fund Management Agency are on track to search for asset managers by the end of the year.
The fund has issued RFPs for an investment consultant and a custodian; has named Paul Costello, former CEO of the NZ$10.1 billion (US$6.4 billion) New Zealand Superannuation Fund as its general manager; and is searching for a chief investment officer.
"If we're lucky, we might be able to achieve manager appointments by year-end," said Rob Barnes, FFMA interim head.
It is expected that Mr. Costello will be heavily involved with the appointment of the CIO, the custodian and consultant, although his departure date from the New Zealand fund has not been set.
"Obviously we want the maximum amount of input from the people who are going to deal with the asset consultants/custodians," Mr. Barnes said.
Consultant responses to the RFP were due Aug. 29; custodian responses are due Sept. 8.
The consultant RFP said the selected firm will work to establish a set of investment philosophies and strategies for the fund and will assist in the selection of managers. The RFP also makes separate note of alternative investments, alongside strategic asset allocation and asset class strategies.
"We have to develop an investment policy and investment strategy, and then we'll work toward portfolio allocation … It's a process that has to be undertaken with great care. It's a bit different to a normal fund," Mr. Barnes said.
He said the FFMA was determining exactly what type of custodial services the fund would require.
"The base services of custodians are pretty uniform, but there is a capacity in terms of value-add, and that's what we're looking at," he said.
The Future Fund is scheduled to receive an additional A$8 billion from the proceeds of a sale of Telstra Corp. stock held by the government, scheduled for this fall. The remainder of the government's current 51.8% share in the telecommunications company will be transferred to the Future Fund. Those shares will be subject to an escrow period of approximately two years, after which fund officials will be free to sell the stock as they see fit.
Mr. Barnes did not expect any specific custodial issues relating to the large holding of Telstra stock the fund would be required to hold.
Penny Pryor is editor of Investment & Technology, Sydney.