ART was born in February 2022 following the merger between SunSuper and QSuper, the largest in the history of Australia’s superannuation industry. The fund continues to grow with over US$ 200 bn and 2.4 mn members, and it recently announced the proposed merger with another fund, Qantas Super. We were delighted to speak with ART’s Head of Investment Strategy, Andrew Fisher, about the fund’s plans and goals.
[GSWF] What makes ART unique and what role does it play in Australian pensions?
[ART] One of the unique elements is in our name and what “retirement” means. We have 2.4 million members, and we are seeing the first generation of Australians retire with mature retirement savings. Focusing on delivering the best retirement income strategies and products for our members is an important differentiator. We are a profit-for-member fund, which is another key differentiator with other superannuation funds. And lastly, our large scale and growth puts us in a unique and privileged position globally.
[GSWF] ART continues to absorb smaller plans – are there more on the horizon and what is ART’s projected AuM by 2030?
[ART] There are always potential mergers. However, the market suggests that the consolidation may slow down, and our growth will mainly be organic on the way forward, through new members and returns. In terms of projections, our goal isn't to be the biggest, but to be the best, and we want to continue to grow these retirement savings to help our members realize the benefits of scale.
[GSWF] The balanced option allocates 18% to bonds, 52% to stocks and 30% to alternatives: is this similar to ART portfolio?
[ART] It is aligned as of today given that the default plan was the balanced option until now. From July 1, the default option (with 80% of our members not making a choice) is transitioning to “High Growth”, which is 3.5% bonds, 65% equities, and 31.5% alternatives.
[GSWF] Total Portfolio Approach (TPA) can lead to superior returns as compared to SAA. What is ART’s general approach?
[ART] By law in Australia, we must report to regulators of our SAA, which forms the basis of the Performance Test. We employ TPA but deconstructing that into risk factors, in order to convert it to an “unconstrained TPA”. We manage multiple total portfolios, and we therefore aim to meet different member needs with a consistent approach and outperformance profile against their SAA. This approach has been quite successful, and all the diversified options we offer at ART have been outperforming their corresponding benchmark.
[GSWF] ART’s balanced pool returned 10.5% in FY23/24 and 8.2% in the past decade. How will these numbers evolve?
[ART] The number one rule for us is discipline, and to understand where our strengths lie. We aim to be a provider of liquidity rather than a taker of liquidity, and unlisted assets, dynamic asset allocation (DAA) and exposure management are key strategic drivers for us.
[GSWF] What % of the resulting portfolio is domestic vs international, and active vs passive?
[ART] Domestic / overseas is 50% / 50%, given that we have an important tax advantage when investing domestically. We are c. 60% passive, with our domestic equities being more passive. By contrast, internationally, we aim to reach a 50%/50% active vs passive mix.
[GSWF] ART recently opened an office in London - why London, and do you see other overseas offices in the horizon?
[ART] London was the best fit given our focus on real assets in the region and the importance of supporting ongoing deal flow. Also there is no time zone overlap between the UK and Australia allowing us to follow the sun when working on large real asset transactions.
[GSWF] How big is your team now, and what is your advice for young professionals seeking to work on investment strategy?
[ART] We are about 27 people at Investment Strategy, among 125 front-office and 75 back-office professionals. We look for a strong quant background, curiosity, and diversity to deliver value to our members. In terms of advice, I would advice to gain diversity in experience.
[GSWF] Personally, you have been at ART for 14 years now. How is your role different from NZ Super, and what are your main goals for the next 3 to 5 years at the fund?
[ART] I was not that long in NZ Super, but there is a lot of affinity in the way we invest. In terms of goals in 3-5 years, I would like for us to leverage the opportunity that our scale provides, as one of the world’s 20 largest pension funds.
