POWERED BY MOMENTUM MEDIA
In-sourcing investment bound by philosophical challenges
The structure of internal investment teams and developing appropriate governance to house new investment staff is a key challenge for super funds in-sourcing their investment functions, according to State Street.
Super fund panellists at a series of State Street roundtables agreed that three main challenges existed for super funds looking to in-source investment functions: garnering clear board support, developing a structure around in-sourced activity, and attracting and maintaining appropriate talent.
Ian Martin, State Street's head of global services for South Asia and the Pacific and head of global markets Australia and New Zealand, said funds also had to answer a number of philosophical questions to determine whether an in-sourced or out-sourced model would work best for their fund.
"It changes the game quite dramatically — if you're managing $10 billion in equities and you decide to run a billion in-house and then $9 billion outhouse — how are you able to create a really appropriate governance structure around that?" he queried.
While some funds found they could, others were nervous, according to Martin.
"It's easy to think about it in isolation from a cost point of view," he said.
Funds could determine whether they could beat the management fees paid to external fund managers by in-sourcing, but it was harder to quantify the challenges beyond that, such as how to integrate a new team, how to provide an adequate governance structure and how to retain talented staff.
"There's remuneration challenges — you can get a cultural mismatch within a firm and then in the long run you leave yourself exposed to losing your team, because if they're successful someone back in the commercial arena can come in and pick them off," he said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
In this latest edition, Anna Shelley, CIO at AMP, shares the fund’s approach to current market conditions and where it continues to uncover key opportunities.
The mega fund has announced a $2.2 billion investment in a leading data centre platform, bringing its global real assets portfolio to nearly $60 billion.
In this latest edition, Australian Retirement Trust’s head of global real assets Michael Weaver explains the fund’s approach to finding new opportunities as it surpasses $300 billion in funds under management.
Fund managers remain hopeful for a Chinese revival story despite the “disappointing” stimulus package announced this week.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
