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”.
TAA pioneer TGM in tie-up with Alpha Vista
Tactical asset allocation (TAA) pioneer TGM polished off a merger with Alpha Vista Financial Services (AVFS) in September, combining its experience in asset management with AVFS’ AI-derived signals. It’s the latest chapter in a story playing out across Australia’s funds management industry, with mandates drying up as super funds internalise management or merge with their larger peers. TGM founder and chairman Peter Higgs told ISN that TGM had lacked “x-factor” and that the merger with AVFS would provide it”, mainly through the launch of a slew of sophisticated new products.
The relationship with AVFS originated via a joint venture in 2021 to develop a downside protection overlay product; the merger came about because AVFS “needed to commercialise their signals, while (TGM) needed to take our offering to the next level” Higgs said.
The merged group’s equity factor overlays are an “area of interest in the market”, but it’s also offering a US equity strategy driven by AI-derived signals and rolling out UN SDG and global climate action equity strategies. At the portfolio level it will offer rebalancing overlays, as well as TAA and dynamic asset allocation overlays incorporating AVFS’ AI signals.
TGM were pioneers of tactical asset allocation (TAA) – or, as it was occasionally known in the press, market timing – in Australia, beginning when they weren’t TGM at all. Higgs was head of asset allocation in the Suncorp investment department in the early 90s and set up a team with direct responsibility for TAA outside of the then-committee driven approach. Suncorp later topped the Towers Perrin quarterly performance survey in the TAA column for 13 consecutive quarters, leading to a mandate from InTech – the first external mandate handled by Suncorp in one hundred years.
Keenly aware that headhunters would soon pick off the team he’d built up, Higgs asked Suncorp to stake them as a subsidiary. Suncorp couldn’t ante up and the team ultimately decided to leave the premises and set up TGM as a boutique proper in 1997 as a joint venture with Legal & General.
AVFS uses “fractal mathematics” to detect patterns in large, real-time data sets. It was founded in 2016 by Manish Nathoo. Directors of the merged company, which will retain its disparate brands, include pension fund expert Ashby Monk and Michael Monaghan, while David Hartley sits on the investment committee with Nathoo and Higgs. The merged company has 28 staff across Sydney and Brisbane and is looking to win new clients globally.
