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TWUSuper adds $50 million to credit mandates
TWUSuper has allocated an additional $50 million to credit, with two $25 million allocations going to the super fund's existing credit mandates with Loomis Sayles and Babson Capital.
The move into credit comes at the expense of global listed infrastructure and global real estate investment trusts (REITs), and represents a 2 per cent change to the fund's asset allocation.
TWUSuper chief investment officer Andrew Killen revealed that the fund's $25 million mandate with Lazard Global Listed Infrastructure had been terminated, and the Russell Investments global REIT mandate had been reduced by $25 million.
"The view [at the November investment meeting] was that with all the volatility around, credit spreads have widened quite a lot in recent months. [Investing in credit is] a reasonable way to get returns with lower risk than equities or equity-like things like listed infrastructure or REITs," Killen said.
TWUSuper is still 2.5 per cent overweight infrastructure, with its strategic allocation targeted at 8 per cent. Its current allocation is now at 10.5 per cent - down from 11.5 per cent after the cancellation of the Lazard mandate.
But Killen said he was happy to be overweight infrastructure since it had been the fund's best performing asset class over the last two years, returning more than 13 per cent.
The other change to come out of the November investment meeting was a 2 per cent reduction in the fund's Australian equities exposure, and a corresponding 2 per cent increase in TWUSuper's global equities exposure.
The reduction in the super fund's 'home bias' came at the recommendation of TWUSuper's asset consultant JANA, and was the prudent thing to do, Killen said.
"We're not going to actually switch the physical assets. We've got an overlay manager, TGM, and we're going to get them to manage the change in exposures by overlay through futures," Killen said.
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