The Source

Being in Australia is fantastic, love Australia, but unfortunately the rest of the world is awake and trading while we're asleep. So being in those markets and active in those markets during those hours just makes sense.

Welcome to The Source. I’m your host Shane Hancock, General Manager of Retirement and today I'm joined by Justine O'Connell who is the Head of Portfolio Strategy at AustralianSuper.

Welcome Justine.

Hi, Shane. Thanks for having me.

Okay, to kick off Justine, could you tell us what your role is at AustralianSuper and the part you play in investing members money.

My area really has two functions. The first is around portfolio design. So, as you know we offer a range of investment options to members. And my team works on setting the objectives, so the return objectives. Thinking about how much risk each investment option needs to take and how much cost each investment option will use.

And then the second key area is really around over-sighting those investment options to ensure that the performance outcome that we get is in line with what we expect.

Right. It’s a really important role. You're part of quite a large AustralianSuper investment team.
We've got offices in New York and in London and a small office in Beijing. What's the benefits and reason again why we have those offices?

You need to be close to the investments.
That's why we have a large unlisted team based in both London and New York. So they can be what people refer to ‘in the flow’, so they can be close to the assets.

The second key reason is to be close to the talent and to recruit the talent. And the people, the portfolio managers we've been able to hire in London is pretty extraordinary. The other reason is markets trade -

Yeah.

- during those hours.

So we also have a number of liquidity and implementation team members there, so we can trade what we call in a ‘follow the sun’ -

Yeah.

- model.

Being in Australia is fantastic, love Australia, but unfortunately the rest of the world is awake and trading while we're asleep. So being in those markets and active in those markets during those hours just makes sense.

Can you talk a bit about unlisted and how the benefits of being large and having good cash flow from members contributions can assist with that?

That's a good point.

So I should say straight out, we invest in unlisted assets because we think they'll generate strong returns for members over the long term. And if we think about something like private equity, we invest in private equity because we think it will deliver better returns than listed equities.

We can invest in unlisted assets because we have strong cash flow and we can lower the fees in unlisted assets, which tend to be more expensive than investing in listed shares by using our scale.

So the model we might use will be different depending on the asset class with private equity, which is, relatively complex to implement.
You need to drive operational improvements in businesses to drive those returns. Well, we partner with really high-quality private equity managers to deliver on that strategy.

To close off, could you just give us what you think the benefits of a member having their superannuation with a large fund, with a large investment team with the focus that we have?

I think the key advantage for a member is that they can use the scale of 3.4 million Australians, and the strong cash flows, to invest globally across a really broad range of asset classes and geographies, so we have a team of over 400 investment experts and their job is to think about investing and making great investment decisions for members.

Thank you so much for joining us today. I think you've really given an insight into the way in which AustralianSuper approaches investing members money on their behalf, for a better retirement outcome. So thank you.

Thanks for having me, Shane.

And thanks for watching The Source and we hope you found the information really valuable.