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.
TelstraSuper looks for a merger partner
Despite the fact that it’s in a “strong and healthy position with positive net member growth”, TelstraSuper is looking to merge to meet the best interests of its 84,000 members.
While the fund didn’t clarify whether it was looking to be snapped up by a significantly larger player or for a ‘merger of equals’ that would see it partner with a similarly sized fund, a TelstraSuper spokesperson said that a “range of potential merger options would be considered…providing they align with the fund’s objectives, values, beliefs and commitment to delivering strong retirement outcomes for members”.
“After careful consideration of the fund’s long-term strategy where size and scale are increasingly important, the TelstraSuper board has determined that our members’ interests will be best served in the long term by seeking a suitable merger partner aligned to the fund’s objectives and values,” the fund said in a release.
“The TelstraSuper board and Telstra Group came to the view that the time has come for TelstraSuper to move forward with a new separate identity from the Telstra Group. Telstra has confirmed its ongoing commitment to our fund as their default superannuation fund. A merger will facilitate the rebranding of the fund.
With $26 billion under management, TelstraSuper is reasonably close to having the $30 billion of FUM that APRA believes is the floor for fund sustainability and which other funds – including Brighter Super – have made deliberate efforts to reach. TelstraSuper chief executive Chris Davies has previously argued that the fund is big enough to offer “great value” to its membership and that larger funds have difficulties on the member servicing front, “particularly in the post-retirement space” where the fund has a growing segment of members.
TelstraSuper’s current custody contract with J.P. Morgan expires in 2025 and it believes that a merger will “facilitate the timely replacement of (its) current custodial arrangements”.
“With members’ best financial interests central to any future merger consideration, the TelstraSuper Board see this as an exciting opportunity for members as we seek to transition to become a larger entity with an industry leading range of benefits and services offered to members.”
Corporate funds are increasingly an endangered species, with only eight left managing $47 billion across 200,000 member accounts per ASFA’s March 2024 industry statistics. Qantas Super is also weighing its merger options as it faces down the deleterious effect that stapling, Covid-19 and increased fund competition has had on its ability to grow its member base into the future.
