UniSuper, the $60 billion fund for Australia's higher education and research sector, is appointing an active strategy for its once passively managed environmental investment option.
Under this important shift management of the Global Environmental Opportunities (GEO) investment option will be internalised and the MSCI ESG Research Sustainable Impact Metrics database adopted for portfolio construction.
The GEO fund will seek to maintain an average environmental revenue target of greater than 75% - from one or more key themes: alternative energy, sustainable water, green building, pollution prevention and clean technology. It delivers what the fund calls a more 'true to label' offer for members.
"The internalisation and active management of this option will deliver the added portfolio construction benefits of reduced stock concentration, better liquidity management, more active stock selection as well as a more active approach to ESG risk management during the portfolio construction process," UniSuper said.
According to UniSuper manager of governance and sustainable investment, Talieh Williams, the fund has seen ongoing demand from members for investment options that align to ESG beliefs.
"Our members are unique, they are highly educated, deeply engaged and can be focused on the impact of their investment choices and broader environmental issues," Williams said.
The shift will see UniSuper manage more than 60% of its member's funds across all asset classes in-house under 45 investment specialists.
The shift towards greater in-house asset management follows an announcement by AustralianSuper chief executive Ian Silk that the fund has flagged expanding the internal investment team to manage more than half of its asset base.
The fund had previously voiced its aim to manage between 35 and 40% of its assets by 2018, however Silk noted at a Reuters Newsmaker event, that it could expand to 50% or more in coming years.
At least 10 large Australian superannuation funds have insourced or are in the process of insourcing components of investment management.
The case for internal investment management is also growing overseas, with Universities Superannuation Scheme (USS) Investment Management's chief operating officer Howard Brindle telling Financial Standard earlier this year that superannuation funds with more than £10 billion ($17 billion) in assets under management should seriously consider implementing an internal investment management strategy.
"We have flexibility in international management and we can make our own changes on the investment asset allocations ourselves," Brindle said, noting some of the benefits of internal management.
"We don't need to go to any committee; we just need to convince ourselves that it is the right thing to do."