Managing a multi-million dollar investment portfolio is no simple task, particularly when you’re investing the retirement incomes of over 2 million members, as is the case for AustralianSuper’s investment team.
Here Alistair Barker, Co-head of Macro and Portfolio Construction, AustralianSuper talks us through the evolution of the investment function, his role and what ‘members first’ means when it comes to investment strategy.
What is your role within the investment team?
I’m responsible for developing AustralianSuper’s broad investment strategy and managing the asset allocation team which looks after the strategy for our largest investment option, the Balanced Option.
It’s a big task. Without giving away any secrets, what steers your decision-making?
Running the portfolio involves a constant process of reviewing, refining, testing our investment process and making asset allocation decisions.
The decisions we make are shaped by a number of factors including the economic outlook, government and central bank policy, and market valuations. We consider how markets are pricing assets, and whether the return is attractive enough for the risks.
We also use a lot of quantitative analysis and models, combined with experience and judgment to form our strategic views. I guess you could call these our trade secrets!
When looking at a potential new investment, what are the top things that you consider?
We start with developing an understanding of the key things that will make an investment successful. Different asset classes have different properties. So, you really need to work out what these characteristics are and then match them up to a potential investment.
Secondly, we do our own analysis. Warren Buffet didn’t invest in anything he couldn’t understand; we don’t, either. While we draw on advice from external experts, we always form our own opinion.
Third, it’s about timing and asking if it’s the right time to invest.
And finally, if you’re investing with someone or with a company, we make sure we trust the people you’re working with.
Has your strategy or process changed as AustralianSuper has grown from managing $30 billion to $100 billion?
The biggest part of our evolution is the move towards using a combination of internal and external management of assets in the portfolio.
We’ve now got the size and scale to make more of our investment decisions in-house at a lower cost and passing savings to members in the form of low fees (which means they get to keep more of their returns)..
The other major change is our ability to make larger investments, like Sydney Ports Corporation or Transurban Queensland, which owns all toll roads in Queensland. It means we can give our members access to investments that other funds can’t.
You invest overseas, too. Can you tell us about Ala Moana?
The $1.1 billion Ala Moana deal was AustralianSuper’s biggest single direct property transaction at the time, with the purchase giving us a 25% stake in the world’s largest open-air shopping centre and one of the premier retail assets in the US.
This investment came about through a strategy we developed a few years ago to diversify our property portfolio offshore.
AustralianSuper is very proud of its ‘members first’ focus. How is this carried through within the investments team?
Every investment decision we make is put through the members-first lens. In everything we do, our goal is to deliver more investment return for less.
Our investment goal is to maximise the retirement savings of our members. We are always asking ourselves, “Which is the right strategy for us to deliver the best after-fee return to members?”