- published on 20/05/2013
HESTA was the top-scoring fund in a survey of member-satisfaction levels carried out by CoreData Consulting, which has highlighted the need for more tailored ... [more]
Whether it is sitting on the board of Media Super or in his previous job as chief executive of the printing industries’ peak body, Philip Andersen is no stranger to adapting to change. He was the industry representative of Print Super when it had just $150 million under management and was part of the investment committee that reorganised Media Super’s external managers when it was born from the merger of Print Super and Just Super in 2008. This year Andersen retired after 19 years as the chief executive of the Printing Industries Association of Australia, having overseen a sea change in printing driven by the rise of online competition. As chairman of Media Super’s investment committee, he is part of a team that is spearheading changes at the industry fund, which now boasts more than 125,000 members and $2.6 billion in assets under management. Andersen says the committee has had a lot on its plate this year with discussions across a broad range of subjects, including to what extent the fund should hedge the currency exposures of its larger offshore investments. How to best increase the fund’s exposure to private equity and infrastructure has also been the focus of the committee, as has implementing the commitments the fund made when it became a signatory last year to the UN Principles for Responsible Investment. Andersen says the fund now hedges around 20 per cent of its currency exposure but discussions have centred on whether to increase that.
“A lot of our peers are up around 50 per cent, and we are having some papers prepared to look and see if we should make changes there,” he says. The recent fall in the Australian dollar has sharpened the focus of funds on managing their currency exposures. In 2010 the fund appointed its first ever currency overlay manager, Tactical Global Management (TGM), to passively manage currency exposure. The fund and its main asset consultant, Frontier Investment Consulting, also carry out stress tests to ensure that, if the Australian dollar fell sharply, the fund would have enough cash flow to maintain the currency forward contracts TGM have put in place. The currency overlay is a reflection of the fund’s greater scale, which has seen Media Super bolster its in-house capacity in the past few years.
Andersen highlights the appointment of chief investment officer Jon Glass in 2009 as a pivotal moment for the fund because it brought a greater focus on risk management and the investment processes of the fund. “We are now, for instance, looking at value at risk (VaR), and we also look at stress testing, and we do liquidity stress testing on the balanced options,” Andersen says. While Glass says the fund has maintained traditional asset buckets rather than moving to a risk allocation, they are now looking at risk “across the portfolio”. Glass has also overhauled the fund’s hedge fund and private equity approach by moving Media Super out of fund-offund vehicles. The move was driven by concerns about the transparency and the underlying risk of fund-of-fund vehicles.
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