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Fund pulls mandate, alters pandemic definition

QSuper will take the management of its social responsible investment option in house and has changed the definition of pandemic illness.

AMP Capital will no longer manage QSuper's socially responsible investment option as of 1 July 2020.

"This change is in response to our members' requests for a more holistic socially responsible investment option that targets a positive impact on certain environmental and social issues, while avoiding investments that have a negative impact," QSuper said in a Significant Event Notice to members.

By transitioning management of the option in-house, the $97 billion fund  said it expects to be able to reduce the investment fee and decrease the standard risk measure while maintaining the existing return objective.

QSuper said investment fees in the option will reduce from 0.72% to 0.24% after the transition and the indirect cost ratio will reduce from 0.18% to 0.05%.

The fund said it will also be able to publish a report annually about the positive impacts achieved by the socially responsible option.

It also indicated a jump in allocation to real estate. As at 31 March 2020, the AMP Capital managed option had a 4.8% allocation to real estate with the majority of the portfolio in equities (62.8%) and fixed interest (24.9%).

QSuper indicated a higher range of allocation to real estate at between 0% and 30% (AMP Capital's range was 0% to 10%). Green building was listed as one of the environmental and social issues important to QSuper members.

It committed to a minimal exposure to fossil fuels, gambling and adult entertainment in the option. The fund already screens out tobacco and controversial weapons across all its options.

In another Significant Event Notice, QSuper updated members on insurance changes intended to improve cover for pandemic illnesses amid COVID-19.

The changes mean from 11 March 2020 QSuper's pandemic illness exclusion will no longer apply to members with default cover as a result of working with the Queensland Government or a default employer who have applied within the first 120 days of starting work with the Queensland Government or a default employer.

Prior to that date, the fund could not pay out a claim relating to pandemic illness within 30 days of cover starting or recommencing.

QSuper also changed the definition of pandemic illness.

Previously, the fund defined pandemic illness as: An illness for which a pandemic alert, advisory, notification, declaration or other similar publication is issued by the Australian Government or World Health Organisation (WHO).

Now it defines pandemic illness as: An illness in respect of which QInsure, after consultation with the QSuper Board, is satisfied that a pandemic alert, advisory, notification, declaration or other similar publication has been issued by the Australian Government or WHO and notifies the QSuper board that the definition has been met.

Read our full COVID-19 news coverage and analysis here.

Read more: QSuperPandemicAMP CapitalSignificant Event NoticeWorld Health OrganisationCOVID-19Mandate
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