Unisuper, Australia’s biggest open super fund with assets of $9.8 billion, has completed what is possibly the largest re-organisation of an equities portfolio in Australia, having recently reshuffled $3 billion in domestic and international shares.
CEO Ann Byrne says these moves followed a major investment review triggered by the merger of TESS and SSAU to form UniSuper in late 2000. They have resulted in the tertiary education super fund moving out of the passive management of Australian equities.
Previously, the fund managed 35 per cent of its $3.6 billion Australian equities portfolio internally using passive management. But it has now converted 20 per cent into an enhanced passive mandate (managed by Barclays Global Investors) and the remaining 15 per cent has been re-allocated to active management.
The domestic equity portfolio was previously overweight towards a growth style, but has since been re-balanced to become style neutral with the allocation to some incumbent managers changing and UBS Asset Management being given an extra Australian shares mandate, starting at $290 million.
UniSuper has also handed an initial allocation of $650 million of its Australian share portfolio to four ‘developing managers’: Alpha Investment Management; Ausbil Dexia; Perennial Value Management; and Lazard Asset Management. To achieve this and to eliminate style bias, UniSuper lowered its allocation to growth manager Colonial First State from $619 million to $213 million.
UniSuper’s $2.6 billion overseas shares portfolio has also been style balanced with the allocation to incumbent managers changing and by adding two new value managers, Bernstein and Delaware, which were each given a $110 million mandate.
Half of the existing $1.6 billion passively managed international share portfolio has been converted to an enhanced passive mandate, managed by State Street Global Advisers.
Byrne says this is because the fund’s internal analysis showed that extra returns could be earned for only a modest increase in risk relative to pure passive management.
With the equities review out of the way, UniSuper is currently examining its $700 million property portfolio and its $800 million fixed interest portfolio. After these, Byrne says it will turn its attention to its infrastructure and private equity portfolios and it will also consider hedge funds later this year.
