(May-2002) Active asset management pays off for REST

The Retail Employees Superannuation Trust’s (REST’s) reliance on active asset management has paid off, with the industry fund dominating Super Review’s list of funds with the best crediting rates for the year ended June 2001.

REST’s shares pool option heads the TOP 10 ranking with a 13.19 per cent crediting rate for the year. Its high growth option grabbed third place with a rate of 11.51 per cent while its diversified fund comes in at eighth place with 11.08 per cent. REST’s cash pool and cash pool options are also in the Top 5 best cash options.

REST CEO Neil Cochrane says while REST is conservative in its asset allocation, it has always been aggressive in its use of active management across all asset classes, including fixed interest.

Historically, this has always helped the fund add value for members. This is especially so when it comes to Australian equities where REST has beaten the benchmark by 5.5 each year over the three years to end June 2001. It has done this with the help of strong active managers like Perpetual, Paradice Cooper and Balanced Equity Management, many of which are boutiques.

Internationally, REST’s use of active managers like the Bank of Ireland and Brandes has also reaped rewards.

REST’s own investment management company, Simco, manages up to 50 per cent of its Australian fixed interest, property and cash, which, according to Cochrane, gives the fund added diversification because its approach is different to that of the external managers.

REST’s strong performance has also continued for the calendar year 2001, despite the volatility of markets, especially in September.

The shares pool option returned 7.2 per cent for the year, comfortably outstripping the Mercer survey’s average of 3.9 per cent. During the same time, the high growth option grew by 9.1 per cent and the diversified fund by 8.7 per cent.

“Our conservative structures and the fact that we use value-orientated managers, rather than growth managers, have held the fund up in difficult times,” says Cochrane.

To ensure that it continues to maintain its track record, REST recently made some mandate changes, including handing Standish Mellon a $230 million international fixed interest mandate in a drive towards more active fixed interest management. It also gave Wellington Management Company a small cap mandate in the hope of repeating internationally the success that it has enjoyed locally with small caps.