Super funds hungry for global stocks, alternatives

The lion's share of the institutional mandates awarded in Australia last year went to international equities and alternatives manager, the latest Rainmaker Mandate Chaser report shows.

Not-for-profit superannuation funds and investment managers handed out 306 mandates totaling $48 billion in the 12 months to December 31.

About a quarter of this money or $12 billion went into international equities, followed by alternatives ($11 billion) and Australian equities ($8.4 billion).

This is based on data collected by Rainmaker. There are 1095 individual investment management firms operating in the broad Australian wealth management market. Rainmaker identifies 638 investment manager groups that have secured at least one institutional mandate.

Who is winning the most money?

Industry fund-owned IFM Investors proved to be the manager of choice for single-manager mandates.

It raised $3.7 billion from the sector last year, mostly in its alternatives funds barring the $12 million in Australian equities.

US- based long only equities manager GQG Partners won $2.5 billion in its international equities strategy.

Janus Henderson, which recently shuttered its Aussie equities business, won the third largest amount, in its Australian fixed income strategies and international equities.

During the period, superannuation funds in-housed $2.3 billion of investments led by Aussie fixed income ($984 million), Aussie equities ($846 million), international fixed income ($150 million) and alternatives ($307 million).

Firetrail, Blackrock Australia, Putnam and Marathon figured in the top 10 most mandated managers for the year among institutions.

Where is it coming from?

Hostplus, AustralianSuper, Media Super, HESTA and Australian Catholic Superannuation and Retirement Fund were the most vigorous in awarding mandates, accounting for 35% of the total mandates by number.

Hostplus now has 166 outsourced investment mandates, with an average size of $219 million.

QSuper has the biggest-sized mandates. Its $81.7 billion of outsourced investments is spread across 30 mandates with an average size of $2.7 billion.

Bonds mandates slow, alternatives growing

Surprisingly, the total amount of fixed income mandates awarded in the year was lower than those for equities which many investors believe to be overvalued.

Instos put $5.4 billion into international fixed income and $4 billion into Aussie fixed income over the period.

"This downward trend in fixed income mandates is unexpected given sentiment surrounding the global economic environment. But it may be that super fund trustees and their investment committees are already factoring in the rebounds notwithstanding equities mandates appointments has also contracted though by not as much," Rainmaker director of research and compliance Alex Dunnin said.

"Super fund consolidation is also a factor in this mandate realignment. The  recent string of fund merger announcements points to this not being an isolated occurrence."

The five fastest growing asset class categories over the year came mostly from alternatives: ESG and ethical investments (up 37%), private equity (up 24%), other alternatives (up 17%), hedge funds (up 19%) and direct property (up 11%).

Read more: USAussieRainmaker Mandate ChaserHostplusBlackrock AustraliaAlex DunninAustralian Catholic SuperannuationAustralianSuperBondsFiretrailGQG PartnersHESTAIFM InvestorsInstosJanus HendersonMarathonMedia SuperPutnamRetirement Fund
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