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.
Boots on the ground help State Street land Brighter Super mandate
State Street will provide a “sweeping range of services” to Brighter Super’s more than 130 investment portfolios across equities, fixed income, private assets and derivatives as the fund looks to transform its operations following the mergers that created it.
Brighter Super CFO Garnett Hollier said that the fund’s newfound scale and its partnership with State Street would allow it to “take full advantage of technological advancements”.
“After a competitive tender process, we selected State Street as we believe they have the proven capability in servicing superannuation funds, the global network and scale, as well as local presence in Brisbane and an extensive superannuation client community that will bring enormous benefits to our members,” Hollier said.
State Street’s Brisbane office – established partly in response to its Australian Retirement Trust win – has been pretty important to its clients in the Sunshine State who, like most clients, prefer boots on the ground and face-to-face service from their custodian (it maintains a Melbourne office for the same purpose).
“This significant mandate further demonstrates State Street’s commitments not only to Australia’s superannuation industry but also Queensland as an important on-the-ground location for servicing our clients,” said State Street country head Tim Helyar (pictured).
State Street will provide Brighter Super with fund accounting and unit pricing, custody, administrative services, alternative investment services, taxation services, financial and regulatory reporting, performance and analytics, investment mandate monitoring and securities lending. Helyar said as super funds grew their assets and membership, it was increasingly important to harness the best technologies and capabilities available through their partners.
“Many funds realise the transformative potential of data but many lack the necessary technical capability, which is why State Street’s systems, expertise and experience are a valuable fit. We look forward to embarking on a long-term partnership with Brighter Super.”
The appointment marks the end of Brighter Super’s relatively short stay at NAB Asset Servicing (NAS, currently winding down operations), which took Brighter’s custody back in 2021. In that deal, NAS already had Energy Super and was facing off with J.P. Morgan, the LGIA incumbent, for the combined entity. The win was sweetened by the fact that it previously lost out to J.P. in LGIA’s previous merger with City Super, a fund for Brisbane local government workers, in 2010. LGIA was the biggest disputed custody mandate during the tenure of NAS executive general manager John Comito and one that grew significantly when LGIA acquired Suncorp Super, to which NAS was already providing custody and back office solutions.
State Street was recently preparing to transition some $80 billion of assets to its platform, largely drawn from NAS’ book of orphan clients, with UBS Asset Management also rumoured to be among them.
