A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
Mercer Sentinel wins biggest-ever tender with T-Corp
NSW Treasury Corporation, the largest not-for-profit fund in NSW and third-largest in Australia, has appointed Mercer Sentinel to advise on its securities servicing arrangements. It is arguably the biggest such tender ever in Australia.
The $80 billion fund represents the backoffice amalgam for the old T-Corp, the former NSW Workcover insurance fund and the NSW Government’s closed State Super defined benefit fund.
The investments of each are being merged under the one roof, overseen by CIO Mark O’Brien, the former CIO of State Super. David Deverall, a former chief executive of Perpetual Trustees, recently became chief executive of the combined T-Corp. Jonathan Green, head of operations and a former general manager of investments at T-Corp, is overseeing the securities services tender.
An interesting aspect of the Government’s move is that the three government-appointed foundation boards of the new T-Corp retain their independence, their own chief executives and also their right to make asset allocation decisions. How this pans out is the subject of a lot of industry conjecture.
For Mercer Sentinel, the advisory role is a very big one because of the complexity of the new operation. The three component funds are very different and each has its own service provider. In fact, it is possible that Mercer Sentinel may recommend that more than one of the three incumbent custodians, or even a new one, be retained. The three are: JP Morgan, (State Super), BNP (the old T-Corp) and State Street (Workcover).
Neither Peter Baker, the Mercer Sentinel chief executive in Australia and New Zealand, nor Jonathan Green at T-Corp, were able to comment last week, given the sensitivities around the securities servicing review. Also, a NSW Treasury spokesperson would neither confirm nor deny the Mercer Sentinel appointment and the securities servicing review.
The previous largest securities tenders for fiduciaries (not fund managers) in Australia were for the Future Fund, won by Northern Trust when the fund was first set up with about $60 billion, and for Australian Super, now with more than $90 billion under management, when the former ARF and STA merged with a total of only $15 billion.
– Greg Bright
