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TCorp changes build on ‘total portfolio approach’
NSW Treasury Corporation, the state government’s $105 billion investment management offshoot, has commenced a restructure among its investment professionals, with 12 positions recently being advertised.
The positions, which report up to previously announced heads of department, have been posted in the careers section of the TCorp website, with nine of the 12 being re-posted last week (March 10) to extend their application periods.
They range in seniority from analyst, through to senior analyst, through to managers, senior managers and senior portfolio managers, covering more general investment positions as well as more specialist sector capabilities in alternatives, infrastructure, real estate, equities and fixed income.
New positions include the role of manager of investment objectives and reporting, which is a revamped ‘investment advisory’ section, and ‘senior manager, real assets operations and strategic change’.
The restructure continues the implementation of TCorp’s ‘Total Portfolio Approach’ to its ‘best-in-class’ style of investment management, which was instituted from 2017 after Stewart Brentnall had joined as CIO and the three main state government funds had amalgamated their investments under separate boards and investment committees. They are NSW State Super, iCare and the old TCorp.
Brentnall’s appointment as sole CIO followed the last spill, of more-senior management, in 2016, which included the three heads of the formerly separate investment businesses – Mark O’Brien from State Super, Jonathan Green from TCorp and Steve McKenna from iCare.
That was overseen by David Deverall, the chief executive, who had joined in February 2016. The formal amalgamation of the investments of the three funds took place in July 2015 but its effective implementation took the best part of two years.
Only McKenna remains at TCorp, although he is currently on secondment to the NSW Premier, Gladys Berejiklian, as economic adviser. He was most recently head of the former ‘investment advisory’ section at TCorp. O’Brien has returned to his pastoral business consisting of two farms in the NSW Southern Highlands, established after he left AMP Capital in 2011, and Green has returned to his roots in asset servicing as a senior executive of NAB Asset Servicing in Sydney.
As previously reported, after joining TCorp from ANZ Wealth in March 2017, Brentnall was given the time to develop his long-term strategy, under the TPA banner, and funding for the resources to fill out the team in order to implement it. This has included some further senior hires and an overall increase in the number of investment professionals from about 35 to more than 60, currently, over that four-year period.
He said last week that the latest changes were neither a ‘spill and fill’, which is the term often used to describe a system whereby staff are asked to re-apply for their jobs, nor a cost-cutting exercise. “We are aligning and expanding our capabilities,” he said.
Big public sector funds and managers which have adopted the TPA strategy of their investments include the Canada Pension Plan, which is perhaps the founding father of the TPA model, GIC in Singapore and Australia’s Future Fund (which calls it ‘One Fund’).
Smaller public sector funds which Brentnall views highly and also operate the TPA model include QSuper, NZ Super and Denmark’s ATP.
With the exception of the Future Fund, the others have each built substantial inhouse management capabilities. Brentnall said: “TCorp considers its limited comparative advantages carefully and has only built internal asset management capabilities in the two areas of cash and fixed income, and real assets and private markets.”
The Future Fund is not permitted to do so under its constitution, which requires external direct investment management. Brentnall expects that overall investment staffing will reach about 70 with existing intentions.
Under the changes underway, the team is expanding its net number with six new roles – four in real assets, one in what used to be called ‘advisory’ and one in partnership selection.
The senior partner selection roles have been beefed up, too, to place more emphasis on selecting top-quality new fund managers rather than the prior focus on the management.
Brentnall said it was difficult to find the best managers and this required a very experienced and specialised capability. Partner selection, implementation and exposure management will now fit under the single ‘portfolio delivery’ team.
Of TCorp’s 16 client portfolios under management, six are now operating on the basis of TPA, with the others on a schedule to transfer across.
The latest changes would address “a few areas that were not operating with optimal alignment to TCorp’s TPA,” Brentnall said. “Thinking about a single portfolio involves a refinement of focus with the most effective possible use of risk.”
