AustralianSuper sticks with securities lending
Tuesday, 2 September 2008 11:50am
AustralianSuper has reviewed its securities lending protocols and decided to continue the practice.
"AustralianSuper, similar to most super funds, employs a range of short and long-selling strategies in order to maximise investment returns to members," the fund told members in its August Investor Report.
The margin for lending securities is typically 5 per cent, they said. Despite the attractive short term additional returns the practice offers, AustralianSuper normally has less than one-tenth of its equity portfolio on loan.
"The utilisation rate (which shows how much of a portfolio is on loan) for AustralianSuper over the last 10 months is generally at or below the industry average and has ranged from 5 per cent to approximately 13 per cent."
The fund stressed however that any securities lending is not handled by the fund itself because "AustralianSuper is involved in securities lending via mandates with the various investment managers - including hedge funds - that invest the AustralianSuper portfolio."
AustralianSuper, which uses JP Morgan Chase Bank as their custodian, is AAA-rated by SelectingSuper. According to the researcher, their Australian equities investment option posted an after fees return of -12.8 per cent for the year to June 2008 compared to the market average of -13 per cent.
Over three and five years the outperformance was more than 100 basis points.
Alex Dunnin
