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.
‘Earnt the respect of the market’: Perpetual feels the Bern with Reilly appointment
Bernard Reilly left Australian Retirement Trust (ART) back in September last year having executed the first few phases of its post-merger growth and integration strategy and with the mindset that it was “time to move on and do something else”.
But while Reilly comes to Perpetual from the country’s second largest superannuation fund, he’ll be presiding over a business that has, in recent times, gotten smaller through the controversial sale of its wealth management and corporate trust businesses and name to KKR for some A$2.175 billion. While its storied Aussie equities team will continue to use the Perpetual monicker under a licensing arrangement for up to seven years, Perpetual itself will be rebranded by 31 December 2025.
“Perpetual has been through a period of significant change which has brought scale and diversification to asset management,” Reilly said in a statement. “I have a deeply held belief in the power of active funds management, and our responsibility as a fiduciary. The firm has a history steeped in developing and retaining outstanding investment talent and a deep commitment to long term value creation for its clients. I am excited by the opportunities ahead to further develop and foster that talent and take the firm’s legacy into the next phase.”
Reilly’s would be an eye-catching appointment for any fund manager, hailing as he does from profit-to-member super fund land where there’s a heavy focus on low fees and simple products. ART takes its equity market exposure through passive vehicles and thinks the evidence for value-add through active management in equities is thin, though the former is the case at most big super funds and the latter isn’t a repudiation of active per se, with ART simply preferring to spend its research and risk budget in areas of the market where there’s greater dispersion between good and bad managers.
And Reilly is not the only super fund executive to head to asset management land – where there are chunkier salaries and bonuses on offer – in recent times, with erstwhile Vanguard Super boss Michael Lovett taking the CEO job at Bell Asset Management and AustralianSuper’s infrastructure tsar Nik Kemp jumping to Dexus.
Reilly presided over the Sunsuper portion of ART prior to the merger, but started his career at State Street Global Advisors with various portfolio management and operations roles and remained there for nearly 25 years, ultimately leaving as executive vice president, global head of strategy.
“He has a proven track record of leading successful multi-regional teams as well as implementing complex programs of change, including overseeing operational efficiency programs,” said Perpetual chairman Tony D’Aloisio.
“Having started his career in portfolio management, Bernard has extensive first-hand experience in managing client monies and a strong understanding of the challenges facing the asset management sector. As an experienced leader and business builder, Bernard has earnt the respect of the market and we’re pleased he will bring his talents to Perpetual.”
Current chief executive Rob Addams is set to go on gardening leave from 2 September but will remain available to Reilly and the board for ongoing transition support.
“Rob has been a committed leader of Perpetual since joining in 2018 at a pivotal time,” D’Aloisio said. “He has led and implemented a transformational strategy which has strengthened corporate trust and wealth management and provided solid foundations for the growth of the asset management business over time. Among his achievements, Mr Adams led the organisation through the uncertainty of COVID-19. The Board thanks Rob for his many contributions and dedication to Perpetual.”
