AustralianSuper to trim PE exposure over talent issue

The Melbourne-based pension is planning to shift its focus from private equity to more direct investments in property and infrastructure, according to Ian Silk, chief executive at AustralianSuper.

AustralianSuper, Australia’s largest pension fund with over A$100 billion ($75.5 billion; €67.5 billion) of assets, is set to reduce its exposure to private equity due to the difficulty of recruiting and training private equity staff, chief executive Ian Silk, was reported to have said at a Reuters event on Thursday.

“The asset class that we haven’t invested in [internally] to date, and is not immediately on the horizon in large-scale investing is private equity,” Silk said, citing the challenge of attracting portfolio managers.

AustralianSuper’s private equity allocation accounted for 5.5 percent of total assets as at end-June 2016, the latest data available. The investor declined to comment further on the future of its private equity programme.

The super fund also aims to manage half of its equities, fixed income, property and infrastructure portfolios in-house within the next five years, rather than relying on external managers in a bid to keep costs low, Silk added.

“We are budgeting for a reduction in our investment costs,” said Silk, referring to fee savings by hiring in-house teams.

Direct property made up 6.7 percent and infrastructure, 9.1 percent of total assets as at end-June 2016.

Private equity, property, infrastructure were among the best-performing asset classes in 2015, the super fund said in the June 2016 report.

AustralianSuper has made commitments to fund managers including AustralianSuper Internal Investments, Frontier Investment Consulting, Industry Super Holdings, Members Equity Bank and Quay Partners.

The super fund invests almost half of its portfolio in North America (45.7 percent), followed by Europe (16.1 percent), United Kingdom (8.2 percent) and China (7.1 percent). The rest of Asia and other markets made up the remaining 23 percent. It has made direct investments in Baidu, China’s Google; Mumbai-based Zee Entertainment, Spanish fashion retailer Inditex and power infrastructure company Ausgrid.