16 May 2023
Cbus Super has embarked on a new five-year investment strategy and aims to partner on more big deals and manage 50% of assets internally in what the fund has labelled a “Differentiated Hybrid” model.
Cbus Acting CEO Kristian Fok said the new strategy expands on the capabilities developed by the fund since 2017.
“Our objective is to be an innovative global, long-term investor, with total portfolio expertise and a focus on investing in the real economy,” Mr Fok said.
“Next year is the 40th anniversary of construction workers winning the right to super and sparking the $3.4 trillion universal system that we have today.
“We are proud of our heritage and connection with our members, and this shows through in our ongoing commitment to investing back into real assets, property, and construction jobs.
“We are looking to build on the success of our previous five-year strategy that saw 38% of asset management brought in-house, total investment fee savings of $512 million1 achieved for members through activities such as internal strategies, external manager renegotiations, and asset allocation refinements*; and the development of strong technology, risk, and operations capabilities.”
Mr Fok said the fund was at an advantage in being able to use existing teams to search for value without the need for costly and potentially risky investments in global offices.
Mr Fok said Cbus would focus on smart partnering rather than establishing a global footprint at this stage.
“Global expansion was an important consideration as we developed the strategy and it’s become clear that it would provide limited value at this point in time,” Mr Fok said.
“Cbus has a strong track record of partnering with global investors like Copenhagen Infrastructure Partners, the Dutch Infrastructure Fund, and Brookfield on significant investments for members.
“And at this point we are in a sweet spot where we are big enough that few deals are too large and few deals are too small. This gives us great flexibility and makes us an attractive investment partner in a number of sectors.
“We don’t need an office in an overseas city to find the right deals for members, so it’s not worth the expense and risk of setting up permanent bases. We will continue to make the most of the flexibility we have.”
Total portfolio approach
Cbus Acting Chief Investment Officer Brett Chatfield said the building out of investment operations capabilities, combined with the success of internal management has set a strong foundation for Cbus’ total portfolio approach.
“The foundation of our investment capability is incredibly strong, which means the overwhelming majority of our efforts can be focussed on getting the most out of markets,” Mr Chatfield said.
“Extracting alpha will be critical going forward given broad market returns are likely to be more muted.
“Our total portfolio approach and internal investment capability has given us insights that we otherwise wouldn’t have had or would have been costly to pay for.
“For example, our Asset Allocation team have collaborated with our Quantitative Investments team to enhance our quantitative signal research platform and systematise the dynamic asset allocation process. Our internal portfolio management teams provide valuable insights to support our research when selecting external managers. And our internal debt team also undertakes our counterparty risk management, allowing the Fund to unlock additional areas of value across our portfolio including through our securities lending programme.”
Cbus’ total portfolio approach to responsible investment (RI) is also a key advantage for the Fund.
“Responsible investment should never be a niche part of our industry,” Mr Chatfield said.
“Our approach gives us an RI lens across asset classes which helps us manage risks and also discover opportunities - particularly in terms of climate investments.”
On the look-out for talent
Mr Chatfield added that the successful implementation of the previous strategy provides the fund with flexibility on where further internalisation will come from.
“We are fairly agnostic as to where the next 12% of internalisation will come from,” Mr Chatfield said.
“This is exciting because it means that we can be opportunistic in searching for talent.
“If the right manager wants to make a break and come over, we can make that happen.”
Background – success of previous 5 year investment strategy
Cbus developed internal investing capabilities across all asset classes as well as broader portfolio functions and has grown internally managed assets from 9% to 38% at June 2022.
The internal hybrid model established under the previous strategy has benefited Cbus members by allowing the fund to:
- Maintain top quartile investment performance over 5, 7, 10 and 20 years to 31 March 2023*;
- Lower investment fees (ex RG-97 transaction and operational costs) by 24bps since 2017;
- Deploy into new, attractive unlisted assets, leveraging our strong expertise in the real economy; and
- Position ourselves as one of the leaders in ESG/RI.
Media enquiries: Tristan Douglas, 0417 736 434 or email@example.com
This information is about Cbus Super. It doesn’t account for your specific needs. Please consider your financial position, objectives and requirements before making financial decisions. Read the relevant Product Disclosure Statement, and Target Market Determination to decide if Cbus Super is right for you. Call 1300 361 784 or visit cbussuper.com.au.
1 Cumulative fee savings since 2017, calculated annually and include transaction cost savings. As at 30 June 2022.
*The Growth (MySuper) investment option obtained top quartile performance ranking over 5, 7, 10, and 20 year periods from the SuperRatings FCRS SR50 Balanced (60-76) Index Survey, for the period ending 31 March 2023. Past performance is not a reliable indicator of future performance.
Cbus is the leading Industry Super Fund representing those that help build and maintain Australia. As one of Australia’s largest super funds, we provide superannuation and income stream accounts to more than 875,000 members and we manage more than $73 billion of our members’ money (as at 31 December 2022). Our members include workers and retirees, their families and employers. As of April 2022, Cbus merged with Media Super and offers Media Super products. For more than 30 years Media Super has been the industry super fund for Print, Media, Entertainment and Arts, and broader creative industries.
Issued 16 May 2023, United Super Pty Ltd ABN 46 006 261 623 AFSL 233792 as Trustee for the Construction and Building Unions Superannuation Fund ABN 75 493 363 262 offering Cbus Super and Media Super Products (Cbus, Cbus Super and/or Media Super).