Sevior's new fund draws $1.2b in equity mandate

Fund manager John Sevior's start-up, Airlie Funds Management, has secured a $1.2 billion mandate from the country's biggest superannuation fund.

Set up a year ago, Airlie counts among its clients $65 billion industry fund AustralianSuper, which gave it $1.2 billion for Australian equity investments in the year to June.

Airlie also invests $542 million on behalf of $23 billion industry super fund CBUS, comprising 2.4 per cent of its Australian share investments. The $13 billion industry super fund HOSTPLUS said Airlie's mandate as at June 30 was $90 million.

Co-founder and managing director David Cooper told BusinessDay Airlie had seven employees, seven institutional clients and about 100 high-net-worth individuals as clients.

Airlie was formed after Mr Sevior departed as head of equities at Perpetual Investments in 2011, prompting a flow of money from the wealth manager.

AustralianSuper investment manager Joseph Wahba said Messrs Sevior and Cooper were a known quantity, and the fund was satisfied Airlie would do what it said it was going to do.

Perpetual Investment remains a huge Australian equities manager for AustralianSuper, managing $2.32 billion in 2012-13, up from $1.6 billion the previous year.

However, AustralianSuper signalled the push towards internal management - as seen at the $36.3 billion super fund UniSuper - was gathering pace. "Over the last year, we've appointed 28 investment professionals across a variety of roles in the investment management function," AustralianSuper said in its latest annual report.

"It is expected internal management will commence in Australian equities, infrastructure and property first, with other asset classes to follow progressively over the next three years.

"Our recent recruits and existing investment team are experienced investment professionals. All bring a breadth and depth of investment knowledge to complement our external fund managers, who will continue to manage members' money in our hybrid investment model."

The report shows that AustralianSuper's flagship balanced fund returned 15.63 per cent in the year to June, a touch over the industry average. Over five years, the return was 4.2 per cent; the 10-year return was 7.64 per cent.

But AustralianSuper, which has more than 2 million members, delivered a cautious outlook.

"We believe the next year will see a return closer to long-term investment performance averages," chairwoman Heather Ridout and chief executive Ian Silk said.

"Continuing volatility, improving sentiment in the US and ongoing growth in China should provide opportunities to increase our investments in global share markets, particularly developed markets, at lower prices."

Mr Silk's total pay for 2012-13 was $611,339.

After a heated start to to this year about tax concessions for super, AustralianSuper reiterated its support for increasing the compulsory super guarantee to 12 per cent over time, and refunding tax paid on super to low-income earners.

These policies, introduced by the previous Labor government, have had muted or no support from the new government.