Systemic risk in the superannuation system likely doesn’t stem from funds themselves, but from their service provider relationships. Regulators need to be thinking harder about where and how it arises – something they’re not necessarily well set up to do.
Big asset owners and managers are embracing the private markets as one avenue for growth, but the complexity that brings to portfolios means they also need to get a better view of what might be decades of siloed information.
How this global giant plans to become a go-to manager for super
M&G is a powerhouse globally, but is little known in Australia despite sitting in the Future Fund’s roster of managers. It’s now setting itself down in front of big super funds and wealth managers with an eye to becoming an indispensable service provider.
And Amy Cho, M&G’s APAC head, thinks the trend of super fund consolidation means there’s plenty of opportunity for large, diversified players.
“We want to accelerate growth, and we want to be a go-to manager,” Cho tells ISN. “(Consolidation) gives us an opportunity because we don’t have everything, but we do have a good suite of capabilities, from public to private markets. On the public side we manage a very decent amount of assets in multi-asset credit, and have a global private market capability and a real assets team in Australia that helps manage our Asian property portfolio.”
The UK-based manager has been handling high grade debt investments for Australia’s sovereign wealth fund for the last decade or so, and wants to expand its offering to the superannuation and wealth management markets, which now handle vast sums of FUM by themselves. That means finding an unmet need, which Cho believes lies in multi-asset credit, where the “window can’t be more perfect”; M&G has been shopping its Alpha Opportunities fund to local institutions.
“The (current regime) is very suitable for quality credit, and our management style is total return. Our intention for our strategy is as a building block for sophisticated investors, and we think we provide a good blend to complement and supplement traditional fixed income investments.”
But in the age of internalisation, institutional-grade managers need more than just a shiny new product for a mostly unserved niche. The new model for managers who want to win mandates from antipodean institutional investors is partnership; not just shoving a fund under their noses, but engaging in a frank exchange of views – and IP.
On that front, Cho thinks M&G has the advantage. It’s the former asset management arm of insurer Prudential – and wears some of its branding in the UK – and can think like the super funds it’s shopping its wares to.
“(Funds) want to work with an organisation that they can sit down with and say, ‘What can I learn from you?’. We’re here to be an asset manager, but we’re also an asset owner. We can talk about issues and pains we share, because we have the life portfolios. It’s a long-term relationship and partnership, and supermarket sales don’t work down here.”
