Those that have made high returns by overpaying for higher-risk/lower-quality credit have been lucky and credit conditions are unlikely to be so easy in the future, writes Michael Block. Now is the time to take a very thorough look at one’s credit exposures.
Scale is a double-edged sword but fund managers with the right model can make it work. And while other super funds are internalising as fast as they can, Aware Super will never completely abandon outsourced management.
Club Plus Super chooses Aussie Super for merger
Club Plus Super, the NSW-based industry fund representing primarily the employees of licensed clubs, has elected AustralianSuper as its preferred merger partner.
In a joint announcement last week (May 13), Stefan Strano, the chief executive of Club Plus, said that exploring a merger was in the best interest of members. The funds have signed a memorandum of understanding prior to due diligence.
With a sizable cohort of potential successor funds from which to choose and with a variety of deal structures available for negotiation, the choice of merger partner has become a fine art for smaller defined contribution funds in recent years.
For instance, Media Super, which was one of the most experienced funds at mergers prior to its final resting place with Cbus this year, is believed to have been swayed by the willingness of the Cbus board, under chair and former Victorian premier Steve Bracks, to allow continued branding for Media plus the establishment of a committee of that industry’s representatives to advise on matters of concern to them.
Prior to that deal, it seemed likely that Media would also go with Australian Super, which is usually the preferred option because of the ease with which such an arrangement is to sell to members. AustralianSuper is currently the best performing industry fund over the past 10 years, with a cumulative return of 8.89 per cent a year. It also has perhaps the largest range of investment options from which members can choose. Media was advised by Rice Warner, now a part of Deloitte Superannuation, on the deal.
Club Super has about $3 billion under management and 60,000 members. AustralianSuper has more than $200 billion under management and about 2.4 million members.
Ian Silk, AustralianSuper’s chief executive, said in the joint statement: “Members of the two funds have many similarities coming from a wide range of workplaces and being focused on the delivery of strong long-term performance.
“This is a great opportunity for our two funds to get to know each other better as we work through the due diligence period.”
