Australian Retirement Trust

When you’re handing out billion-dollar mandates, managers will “part the sea for you”. But there’s more than just returns to be weighed when answering the question of what makes a good external manager relationship.

‘Once-in-a-decade’ events are becoming more and more common, but avoiding them altogether is just one way of protecting portfolios. ART is building new capabilities to absorb their impact – and come back from them even stronger.

Perpetual has turned to the “experienced business builder” and former CEO of the circa $300 billion Australian Retirement Trust to set it on a new course as it lops off business units and doubles down on asset management.

The megafund has reshuffled its executive team and seen several key departures as it hits $300 billion in funds under management and embarks on a restructure of its operational model.

Megafunds might be thought of as lumbering beasts of the ASX, but taking advantage of market dislocations means moving pretty quickly. “Size, scale and power” in manager relationships helps.

While Australian Retirement Trust thinks massive scale makes offshore investing a must, not every fund wants to join the jet set, and UniSuper thinks there’s still plenty of opportunities to be had at home.

The $280 billion ART has become the latest megafund to set up an offshore outpost as it looks to secure “even more compelling investment opportunities” for its 2.3 million members.

Australian Retirement Trust has seen the cycle of in- and out-sourcing around the world and doesn’t want to be part of the same ‘pattern’. But even very large super funds have to think hard about their service providers, with counterparty risk emerging around similarly large managers.

It turns out not everybody wants flash new overseas offices. And while funds aren’t sweating the constraints of Your Future, Your Super when it comes to private markets, some assets are just better handled in the public ones – illiquidity premium be damned.

Australian Retirement Trust (ART) is getting bigger and more complex. To make sure that doesn’t turn into a big, complex problem, the fund has found itself a new head of investment resilience and is thinking hard about what’s really driving returns in a post-Covid world.