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.
Qantas Super flies into the sunset with ART merger
Australian Retirement Trust (ART) will take on Qantas Super’s 26,000 members and $9 billion of FUM in the latest of a series of mergers with smaller funds that have padded its already gargantuan asset base.
Qantas Super announced its intention to merge in September 2023 as it struggled with the deleterious impact that stapling, Covid-19 and increased fund competition and regulation had on its ability to grow its member base into the future.
“Qantas Super has had the privilege and responsibility of managing the superannuation and retirement savings of Qantas Super’s members for 85 years, and selecting the right partner to carry on this work is a responsibility the trustee board has taken extremely seriously,” said Qantas Super chair John Atkin. “We believe that ART will be the right partner to help our members feel confident in their financial future so they can look forward to retirement.”
As was the case in its merger with aviation industry fund AvSuper, ART’s ability to administer legacy defined benefit arrangements appears to have been a winning factor, while ART chair Andrew Fraser saying that Qantas Super’s member base would also “benefit from a range of quality products and services for competitive fees and insurance premiums.
“We’ll continue to focus on our 2.3 million members as we plan for the merger with Qantas Super,” Fraser said. “With both ART and Qantas Super deeply committed to doing the right thing by our members, we will work towards a merger together. The merger will proceed if we believe it is in the best financial interests of members.
“The last financial year has been the biggest year of transitions for Australian Retirement Trust, with four successor fund transfers and our corporate transitions totalling $19 billion. Not only does this cement our position as an industry leader in the merger and transition space, but it is evidence that trustees and corporate Australia are choosing us, and we are incredibly proud of this.”
ART has made a business of being big, with its dedicated transition team and custodian State Street making (relatively) quick work of prior mergers with funds including AvSuper, Australia Post Super, Alcoa Super and Commonwealth Group Super, among others. It’s part of a deliberate strategy to come out on top in a period of industry consolidation, with ART chief commercial officer Dave Woodall telling ISN that “if we’re not growing market share… we’re losing it to competitors”.
“Our focus is on ensuring we’ve got good retention and good growth, Woodall said on the occasion of the Alcoa merger. “It’s critically important for us to maintain the 2.1 million members that we have – but in our humble opinion, that isn’t enough… ($500 billion) is not an absolute number, but we have to be careful that we don’t go from the second largest to the third or fourth because we’ve taken our eye off the dynamics of a consolidating market. If we’re losing market share to Aussie or Aware, whoever it is, we’ll lose an opportunity for leveraging our scale.”
