Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
UniSuper gets bullish with new property, equities deals
Cornerstone industry fund UniSuper has put its stake in the ground for the near to medium term, signing an exclusive deal with external liquid equities manager NorthStar at the same time as announcing the acquisition of a 50 per cent stake in a $1.1 billion property portfolio across Sydney and Melbourne.
The $120 billion superannuation fund on Monday announced it acquired a 340 square kilometre industrial property portfolio made up of 20 assets, which it purchased for $560 million from the National Pension Service of Korea and will own jointly with Blackstone and Dexus. More than half of the assets sit in the Quarry Industrial Estate in Sydney’s west, while the rest lie in the key Truganina, across the heart of west Melbourne’s industrial belt.
According to UniSuper’s senior property manager, Nick Stephens, the deal shores up the fund’s $7.3 billion property portfolio and shows effectively scale can enhance transaction operations.
“We are delighted to acquire this high-quality portfolio of stabilised income producing assets to complement our existing industrial development pipeline in the strongly performing logistics sector,” Stephens said in a release. “The transaction highlights UniSuper’s ability to transact swiftly without the need for debt funding or regulatory approvals.”
The acquisition was negotiated on behalf of UniSuper by property investment management group
Richmond Bridge under an industrial real estate investment mandate. Richmond’s chief investment officer Peter Wylie said the buyers were able to capitalize on a market with fewer buyers, which afforded UniSuper an attractive entry price.
“When presented with the opportunity to assess this portfolio for UniSuper we did not hesitate, recognizing the rarity of such offerings in the market,” Wylie commented.
Change for the better
The property deal is just the first of two significant moves from UniSuper this week. Less than 24 hours after it was announced the fund put a second release out detailing the appointment of sustainable investment group NorthStar Impact as a specialist external listed equities manager. The portfolio will reportedly sit within UniSuper’s Sustainable Balanced and Sustainable Growth investment options.
The NorthStar equities deal sits nicely alongside the deal it announced with another sustainability focused fund manager, Uniseed, in March 2022. That deal, which saw UniSuper commit $75 million to the fund manager, helped Uniseed provide seed funding for early-stage research and technology aimed at “changing the world for the better”.
According to UniSuper’s manager of sustainable portfolios, Jarrod McDonald, the latest deal with NorthStar Impact helps UniSuper contribute to shaping a better future.
“While UniSuper takes into account environmental, social and governance considerations into all
investment decisions fund wide, many of our members are looking for options that go even further,” McDonald said. “Our sustainable branded investment options* give them that choice, and our investment in NorthStar aligns strongly by providing exposure to innovative companies, many of which are homegrown.”
