Super fund backs Sevior to tune of $1.2b
Just one year old, Airlie counts among its clients the $65 billion industry fund AustralianSuper, which gave it $1.2 billion for Australian equity investments in the year to June, 2013.
Airlie also invests $542 million on behalf of the $23 billion industry super fund Cbus, comprising 2.4 per cent of its Australian shares 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.
Investment manager at AustralianSuper 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 $2.3 billion in the 2013 financial year - up from $1.6 billion the previous year.
But AustralianSuper flagged the push towards internal management - as seen at the $36.3 billion super fund UniSuper - was gathering pace.
"Over the past year we've appointed 28 investment professionals across a variety of roles in the investment management function," AustralianSuper said in its 2013 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 15.6 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 7.6 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," chair 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 sharemarkets, particularly developed markets, at lower prices."
Mr Silk's total pay for 2013 was $611,339.
After a heated start to the 2013 calendar 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 muted or no support from the new government.
Frequently Asked Questions about this Article…
Airlie Funds Management is a start-up equity manager led by high-profile fund manager John Sevior. AustralianSuper, the country's biggest superannuation fund, awarded Airlie a $1.2 billion mandate for Australian equity investments in the year to June 2013, reflecting AustralianSuper's confidence in Airlie’s team and investment approach.
Airlie was co-founded by John Sevior and David Cooper. Sevior left his role as head of equities at Perpetual Investments in 2011, and Cooper (Airlie’s co-founder and managing director) has described the firm as a small team with institutional experience—seven employees, seven institutional clients and about 100 high-net-worth individual clients at the time of the report.
Besides AustralianSuper’s $1.2 billion mandate, Airlie manages $542 million on behalf of the $23 billion industry super fund Cbus (equal to about 2.4% of Cbus’s Australian shares investments). The $13 billion industry super fund Hostplus had a mandate of $90 million with Airlie as at June 30.
AustralianSuper uses a hybrid investment model: it appoints external managers such as Airlie to manage parts of its portfolio while building internal investment capability. This approach aims to combine external expertise with in-house management to benefit members, although AustralianSuper is also increasing internal management capacity over time.
AustralianSuper’s flagship balanced fund returned 15.6% in the year to June, slightly above the industry average. Its five-year return was 4.2% and its 10-year return was 7.6%. The fund’s leadership expects returns in the next year to be closer to long-term averages amid ongoing market volatility.
Yes. Perpetual Investments remained a large Australian equities manager for AustralianSuper, managing $2.3 billion in the 2013 financial year, up from $1.6 billion the previous year, even after John Sevior left to form Airlie.
AustralianSuper expressed a cautious outlook, noting continuing volatility but potential opportunities from improving US sentiment and growth in China. It also supports increasing the compulsory super guarantee to 12% over time and refunding tax paid on super to low-income earners—policies the fund believes would benefit members.
AustralianSuper said it has hired investment professionals and expects to start internal management in Australian equities, infrastructure and property first, with other asset classes to follow progressively over about three years. 'Internal management' means those asset classes will be managed by the fund’s own investment team rather than solely by external fund managers, while a hybrid model will continue.
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