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BlackRock/BGI still paying for GFC as Westscheme looks elsewhere
Westscheme completed an overhaul of its $970 million Australian equities portfolio just before Christmas as BlackRock and Barclays Global Investors (BGI) pay the price for the global financial crisis (GFC), less than a month after Prime Super completed an identical reshuffle.
The new lineup consists of a 14 per cent allocation to both Bennelong Australian Equity Partners and Colonial First State Asset Management, and a 36 per cent allocation to each of Macquarie Funds Group and Ankura Capital, whereas previously the manager configuration comprised allocations to BlackRock and BGI.
Westscheme takes a low-risk approach to investing and was disappointed with the lack of risk protection and poor risk/reward outcomes provided by BlackRock and BGI over the course of the global financial crisis (GFC), according to Westscheme chief executive Howard Rosario.
Westscheme had enjoyed good exposure for several years through Barclays and been rewarded through its style of investing, Rosario said.
“When we went through the GFC we didn’t protect ourselves, we didn’t find ourselves well enough protected from downside,” he said.
As a consequence Westscheme instigated a review and decided to increase the variation in the portfolio, without significantly increasing the risk budget, he said.
“We’ve blended up a number of different styles, so there’s fundamental indexing in there, it’s just slightly enhanced — we couldn’t call it highly active equity management,” Rosario said.
The fee structures comprise a moderate base fee and meaningful performance fee component to better align the interests of the new managers with those of the fund’s members, according to a statement from Westscheme.
“Importantly, all incoming managers are utilising tax-aware strategies ... Consistent with Westscheme’s focus on after-tax investing, the incoming managers’ performance (and associated performance fee benchmark) will be measured against a gross of franking credits benchmark,” the statement read.
The reshuffle is identical to the lineup announced several weeks earlier by Prime Super, which also parted ways with BlackRock and BGI. Both funds employ the services of asset consultants Access Capital Advisers.
Both funds had also previously announced changes to their international equities lineups, which now consist of 35 per cent allocations to AQR and PanAgora, and 15 per cent allocations to Realindex and MFS.
AUTHOR
Mike Taylor
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