Being small is an advantage when it comes to investment operations, according to Christian Super.
Emma Jonceski, senior investment analyst at Christian Super, said the fund had four clear advantages due to its size. These were: a focus on prioritisation; using indicators instead of checking every detail of fund manager and custodian data; harnessing the multidisciplinary skills of the investment team for early identification of problems; and the easier development of relationships with service providers because of its team’s small size.
She said that a key strength for the fund came from its comparatively low ability to spend on resources, because this had led to efficient prioritisation.
She added this attitude of prioritisation ran throughout the $1 billion fund.
“I remember meeting someone a few years back at a conference whose responsibility was to the Australian equity asset class and she said they tracked their fund managers trades every day. We don’t do that. I don’t need to spend all the time checking every single thing, every single day, because it’s not going to make that much difference,” Jonceski said.
Instead, the super fund has mechanisms and reports set up to give indicators on its fund managers and custodians.
“We are able to go into the detail when we need to, but we don’t need to spend the time looking at every piece of data, every single transaction, every trade, every accrual, every outstanding payment,” she said, noting that with only eight people on the investment team time was a precious resource.
Jonceski added having a small, multidisciplinary team was advantageous because most of them had responsibility for both investment operations and investment strategy, allowing for cognitive diversity as well as early input into whether a decision would work or not.
“[For example,] if someone has come to you with the best investment strategy ever but it is going to cost twice as much as the outperformance to implement, then someone is going to figure that out pretty early in the piece,” Jonceski said.
As opposed to large funds where the staff could number in the hundreds, Jonceski said a small team also allowed for better relationships with service providers as it was much easier for the provider to know who to contact if something went wrong.
“Having good relationships is good business, and I think it’s easier to do when there are fewer people.”
Jonceski will be speaking at the Investment Operations Conference in Sydney on February 24. To find out more about the event click here.