The A$12.2 billion (US$9.8 billion) Funds SA, Adelaide, Australia, rejiggered its strategic weightings to equities and credit following an extensive review conducted earlier this year.
Richard Smith, CEO of the South Australian government-owned corporation that manages the investments of the state's public sector superannuation funds and other approved public authorities, said the review resulted in a small decrease in Funds SA's strategic equities allocation and a small increase in its credit allocation.
In the balanced fund, equities were reduced about seven percentage points and the credit allocation rose by two points.
The strategic allocation for the fund includes: 5% cash, 7% fixed income, 15% inflation-linked securities, 10% credit, 8% property, 27% Australian equities, 22% international equities and 6% growth alternatives.
“We're not that far away from our strategic position,” Mr. Smith said.
“At the moment we'd be overweight credit and still a little underweight equities but not massively so. We simply saw the risk-return trade-off between equities and credit favored credit, especially the investment grade part of the credit market, and that in the prospective environment of perhaps lower economic growth that credit might offer better opportunities than the overall equities market.”
No new managers were hired; the extra funding went to Funds SA's existing managers.
Aberdeen Asset Management, Macquarie Investment Management, AMP, GMO, Loomis Sayles and PIMCO are the manager's credit managers, while on the equities side, management is handled by Barclays Global Investors, Bernstein Australian Value, Goldman Sachs JBWere, Orion Asset Management, Perennial Growth and Perennial Value Management.
Kristen Paech is a reporter with Investment & Technology newspaper in Sydney.