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.
EISS switches custodians
(Pictured: Alex Hutchison)
Energy Industries Superannuation Scheme, the A$4.3 billion NSW-based fund, has changed asset servicing provider following a review. Northern Trust is replacing JP Morgan.
The fund did a “detailed search and due diligence” under the supervision of chief executive Alex Hutchison and with the help of consultants. This is a relatively new trend whereby fund chief executives and chief investment officers seem to be taking far greater interest in their custodian relationships than previously, where the decision had been left to CFOs and COOs.
Hutchison said consultants to the review were Michael Rice, of Rice Warner, and Antionette Elias, a partner at EY (formerly known as Ernst & Young).
Hutchison said: “The custodian is a key strategic partner in the provision of services for the fund and competition in this space has significantly increased over the past few years. Northern Trust’s culture, global operating model and technology systems were key areas of importance for the fund.”
Rohan Singh, managing director of Northern Trust in Australia, said: “We are delighted and honored by the appointment, and look forward to supporting EISS with a range of solutions to meet their investment oversight, governance and growth strategies.”
JP Morgan’s loss follows its big win of the Cbus asset servicing contract, from NAB Asset Servicing, late last year. That transition is continuing.
