Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Print
February 05, 2007 12:00 AM

Aussie fund cuts bond allocation to zero

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    INVESTMENT & TECHNOLOGY

    The stories on this page are provided by Investment & Technology, a monthly publication based in Sydney that is written for professional investors in Australia. All amounts are in Australian dollars, unless otherwise noted.

    SYDNEY — The A$4.5 billion (US$3.55 billion) MTAA Super will reduce its fixed-income allocation to zero this year, after determining its "target return" portfolio of unlisted assets can provide higher returns with less volatility.

    After reviewing the fund's strategic asset allocation with consultant Access Economics late last year, officials at the Motor Trades Association of Australia Superannuation Fund decided to boost the "target return" portfolio ceiling to 48% from 45%.

    Believed to be a first for an Australian super fund, MTAA Super Deputy Chief Executive Paul Watson said the fund's abandonment of its 2% bond exposure had less to do with recent poor returns for the asset class — underperforming cash for three of the last four years — and more to do with unlisted assets providing "exactly the same kind of exposure" for less volatility and higher returns.

    "We've been able to (dispense with bonds) because eight years ago we became an early adopter of unlisted assets with bondlike returns," he said.

    "We've now got portfolios of direct property and mature infrastructure with long-term concessions, strong positive cash flows and no correlation to the ying and yang of the markets."

    The exposure to bonds has been dialed down gradually, Mr. Watson said, but Macquarie Funds Management's 1% Australian bond mandate and Barclays Global Investors' 1% offshore bond mandate both will disappear this year.

    Pooled bond funds will retain a tiny presence because MTAA Super offers a diversified fixed-income member choice option, which Mr. Watson said had some followers among members close to retirement.

    The raising of the "target return" portfolio ceiling to 48% in the next two years would give the fund some "breathing space," Mr. Watson said, particularly as the pipeline of potential deals looks promising, particularly overseas.

    West Australian Government realigns foreign stocks

    PERTH, Australia — The A$7.8 billion (US$6.16 billion) West Australian Government Employees Superannuation Board has overhauled its $2.5 billion international equities portfolio, replacing its regional orientation, style-specific and passive core with an all-active, all-global and "thematic-biased" lineup.

    The fund terminated three managers, hired two and altered two other portfolios.

    Sharon Hicks, acting chief investment officer, said the systemic reduction of cross-sectional volatility in markets has made it harder for value or growth managers to consistently outperform, while the rise of multinational companies made regional mandates less relevant, at least for large-cap stocks.

    For that reason, GESB terminated Europe Australasia Far East mandates with Fidelity Investments and Wellington Management Co., while a U.S.-only equity portfolio with Goldman Sachs Asset Management also was dropped. Wellington continues to manage global bonds for the fund.

    Ms. Hicks said GESB would only return to regional mandates in the developed equities markets if it decided to have specialist midcap or small-cap exposures.

    Grantham Mayo van Otterloo & Co. and Genesis Investment Management remain emerging markets managers for the fund.

    In place of the regional mandates, GESB has hired two managers — Newton Investment Management Ltd. and Lazard Asset Management — for the thematic mandates, which Ms. Hicks said would help deliver the more top-down orientation the board was seeking.

    Meanwhile, a U.S. value mandate with AllianceBernstein LP has been transferred into the firm's "global blend" strategy which, as the name suggests, combines Alliance's growth-biased stock picks with Bernstein's value-oriented calls.

    Finally, a passive core mandate with State Street Global Advisors has been changed to an enhanced approach.

    Ms. Hicks would not reveal the size of the allocations to any of the new or retooled mandates. She also would not identify the transition manager, but said it helped deliver "the smoothest changeover I've been involved with while at GESB."

    Two U.S.-based companies look for offices in Australia

    Affiliated Managers Group, Prides Crossing, Mass., one of the world's leading proponents of the multiaffiliate funds management model, plans to open an office in Australia. AMG officials are believed to have made a decision on a person, but no announcement has been made yet.

    AMG had investments in 25 managers, with total assets under management of US$241.1 billion, as of Dec. 31.

    Janus Capital Group, Denver, also is looking at setting up in Australia and will be sending a contingent in late February as part of its continuing plans to look at expansion opportunities in the region.

    NSW fund reports asset allocation shifts

    GROSVENOR PLACE, Australia — The $31 billion pooled fund of NSW State Super sharply reduced its allocation to Australian equities in the second half of last year, and awarded its first ever international long-short mandates to AQR Capital Management and AXA Rosenberg Investment Management.

    The fund's trustee, SAS Trustee Corp., has just released its asset allocation snapshot as of year-end 2006, which reveals a 34.7% exposure to domestic equities, down from 37.5% six months earlier.

    The international equities exposure rose to 28.6% from 27.9%, partly explained by new offshore long-short mandates with AQR ($271 million) and AXA Rosenberg ($269 million).

    Emerging markets mandates of A$95 million each with Lazard Asset Management and Trilogy Global Advisors also appeared on the external manager list for the first time.

    State Super's exposure to alternative assets also rose sharply — to 6% from 4.5% — during the second half of the year, highlighted by new allocations to a GMO "absolute return" fund ($200 million) and an EG Funds Management "value-added property" mandate ($2 million).

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Gender diversity is improving on FTSE 350 boards
    Gender diversity is improving on FTSE 350 boards
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing