Victorian Funds boss quits

THE $37 billion Victorian Funds Management Corp is on the lookout for its third chief executive in as many years, after Justin Arter quit the state-owned funds manager to run the Australian arm of global investment giant BlackRock.

By InvestSMART · 22 May 2012

By InvestSMART ·
22 May 2012

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Mr Arter's exit coincides with the Baillieu government ordering a greater level of oversight of VFMC and questioned its efforts to develop an in-house funds management team.

VFMC oversees investments on behalf of the state's insurance agencies, superannuation funds, hospitals and some universities.

A former Goldman Sachs banker, Mr Arter joined VFMC as chief executive in late 2009. While investment performance improved under Mr Arter, the Baillieu government pushed ahead with a review of the manager soon after it came into office a year later. The review, overseen by KPMG, probed the fund's group structure, governance, management and investment processes.

Victorian Treasurer Kim Wells said yesterday he wished Mr Arter well in his future role.

"Justin was appointed to help get the Victorian Fund Management Corporation back on track after a poor investment performance under the previous government," Mr Wells said.

VFMC's board issued a statement saying Mr Arter had been instrumental in pushing through several "important enhancements" at VFMC.

The latest performance figures show VFMC delivered net investment returns of 12.6 per cent last financial year, outperforming its industry benchmark.

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Frequently Asked Questions about this Article…

What happened at the Victorian Funds Management Corporation (VFMC)?

VFMC’s chief executive Justin Arter has quit to run the Australian arm of global investment firm BlackRock. The $37 billion state-owned fund is now searching for its third CEO in as many years, and Arter’s exit coincides with increased government oversight of VFMC.

Who is Justin Arter and why does his move to BlackRock matter to investors?

Justin Arter is a former Goldman Sachs banker who joined VFMC as chief executive in late 2009. Under his leadership VFMC’s investment performance improved, and the board said he pushed through several important enhancements. His move to BlackRock is notable because it removes the leader credited with recent performance gains from a major state fund.

How big is VFMC and what types of funds does it manage?

VFMC manages about $37 billion in assets and oversees investments on behalf of the state’s insurance agencies, superannuation funds, hospitals and some universities.

What recent investment performance did VFMC deliver?

The latest figures in the article show VFMC delivered net investment returns of 12.6% in the last financial year, outperforming its industry benchmark.

Why has the Baillieu government increased oversight of VFMC?

The Baillieu government ordered greater oversight and questioned VFMC’s efforts to build an in‑house funds management team. This action led to a review of VFMC’s operations shortly after the government took office.

What did the KPMG review of VFMC examine?

The KPMG-led review probed VFMC’s group structure, governance, management and investment processes to assess how the state fund was being run.

Is VFMC actively searching for a new chief executive?

Yes. With Justin Arter’s departure, VFMC is on the lookout for its third chief executive in as many years, according to the article.

What did VFMC’s board and the Victorian Treasurer say about Arter’s departure?

VFMC’s board said Arter had been instrumental in implementing several important enhancements at the fund. Victorian Treasurer Kim Wells wished him well and said Arter had been appointed to help get VFMC back on track after poor investment performance under the previous government.