Funds SA reviews 18-year custody arrangement

Alice Uribe

By

19/09/2018

South Australian public-sector fund Funds SA has invited seven firms to tender for its custody and investment administration services business, on the back of swelling funds under management.

The $32 billion fund, which manages money for the South Australian public sector – including superannuation schemes, insurers and endowment funds – has had a custody relationship with JPMorgan Chase since 2000.

Funds SA said in a statement it had appointed Mercer Sentinel as its tender adviser. The seven firms the fund approached to participate in the process are BNP Paribas, Citi, JP Morgan, NAB, Northern Trust, Royal Bank of Canada and State Street.

“The custody function is a critical relationship for Funds SA, and having the right long-term partnership in place is key to the success of Funds SA and our clients’ investments,” Funds SA chief executive Jo Townsend said. “This tender provides us with the opportunity to review the current market, with the aim of ensuring that Funds SA partners with the organisation best placed to support us in meeting our current and evolving requirements.”

In a statement, Funds SA said it had cause to review its custody arrangement because of “experiencing significant growth” in funds under management and client numbers.

“The custodian tender forms a key part of the organisation’s strategic plan and its ongoing governance of material outsourced arrangements,” the fund stated.

In January, Funds SA replaced Willis Towers Watson with JANA Investment Advisers as its assets consultant. WTW had been the fund’s asset consultant since 2009.

In August, Funds SA announced it had appointed board director Paul Laband chair. Also, former IFM Investors head of private equity Judith Smith was appointed to the board.

Laband was formerly head of Towers Perrin and previously held a strategy role at UniSuper.

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