A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
How GSFM has taken to an import/export model
The two sides to the deal whereby Canadian fund manager CI Financial took a controlling stake in GSFM Funds Management is starting to take shape, with the Australian-based firm launching successful campaigns to both export Australian capabilities to Canada and import those via its new parent.
The deal, signed in November 2016, involved the purchase of 80 per cent of the former Grant Samuel Funds Management, mostly from its investment banking backer Grant Samuel. Senior management have retained a 20 per cent stake.
But for the deal to deliver on its long-term promise for both the Canadian and Australian companies it had to be a true partnership with both sides looking to export investment capabilities to, and import from, each other.
The first Australian beneficiary of this starting to work is Munro Partners, in which GSFM has a 25 per cent equity stake and is the distributor. Munro is a Melbourne-based absolute-return global equity manager, which has garnered about A$700 million from Canadian investors in just the last quarter.
Andrew McKinnon, executive chair and founder of GFSM, said that when the firm did its deal with Munro in 2017, it had about $100 million under management. It now had more than $1.1 billion, he said.
McKinnon, with the GSFM chief executive, Damien McIntyre, and the CI Financial chief executive, Peter Anderson, met in Sydney last week. Anderson said that he couldn’t be more pleased with how the partnership had gone over the past two-and-a-half years.
On the other – import – side of the relationship, GSFM will launch a global smaller-companies fund for Cambridge Global Asset Management, a firm for which CI Financial has raised about US$25 billion over the past 10 years. “It [the new fund] should be well received in Australia,” Anderson said.
McIntyre said Zenith had issued a ‘recommended’ rating on the firm. “Our first stop will be retail for them, and then institutional,” he said. “You have to make continual contact with the clients, especially in the retail market,” he said. In Australia, there are two key numbers: the three-year numbers and the five-year numbers. Cambridge’s are very good. No-one gets a free pass any more… We look forward to importing more from Canada after the Cambridge launch.”
He said that where possible GSFM would like to own some equity in its managers but, if it was unable to do that, then it would still like to help with distribution. One of the attractions of GSFM as a distributor is that it acts as the RE on its retail funds, providing greater certainty for its own revenue stream and security for the managers.
And one of the attractions for CI Financial about dealing with GFSM, Anderson said, was that the company “looked a lot like we did 15 years ago”. What he meant by that was that GSFM is predominantly a multi-affiliate manager with a special expertise in distribution, especially retail distribution. The majority of the parent’s income now comes from strategies it manages itself. When Anderson joined it in 1997 it had no ownership over the management of underlying assets.
“We would never have come to the Australian market if we had to plant a flag on our own,” he said. “The relationship is definitely one of a partnership. What GSFM has accomplished with Epoch [Investment Partners] and Payden [Payden & Rygel Investment Management] is excellent.”
– G.B.
