How is the Pooled
Fund managed?
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Investment managers
Pooled Fund assets are managed by external fund managers appointed by the Trustee Board on the advice of the asset consultant. The performance of the various fund managers is monitored throughout the year and managers may be added or replaced. The fund managers at 30 June 2010 were:
Australian Equities
- AllianceBernstein Investment Management Australia Ltd
- BlackRock Investment Management (Australia) Limited
- BT Investment Management (RE) Limited
- GMO Australia Limited
- Lazard Asset Management Pacific Co
- Macquarie Investment Management Limited
- Maple-Brown Abbott Limited
- Northcape Capital
- Perennial Value Management Limited
- Platypus Asset Management Pty Ltd
- State Street Global Advisors, Australia, Limited
- Wallara Asset Management Pty Limited
International Equities (and currency)
- AllianceBernstein Investment Management Australia Ltd
- Altrinsic Global Advisors LLC
- AQR Capital Management, LLC
- Arrowstreet Capital L.P. (via Macquarie Investment Management Limited)
- AXA Rosenberg Investment Management Asia Pacific Ltd
- Axiom International Investors LLC
- BlackRock Investment Management (Australia) Limited
- Capital International, Inc
- Fidelity International Limited
- Lazard Asset Management Pacific Co
- Pareto Investment Management Limited
- State Street Global Advisors, Australia, Limited
- Trilogy Global Advisors, LLC (via Orion Asset Management Services Pty Limited)
Alternative Assets
- Access Capital Advisers Pty Ltd
- Deutsche Asset Management (Australia) Limited
- GMO Australia Limited
- Kaplan Funds Management Pty Limited
- Propel Investments Pty Ltd
- RARE Infrastructure Limited
- Siguler Guff & Company
- State Street Global Advisors, Australia, Limited
- Vanguard Investments Australia Ltd
Property
- DEXUS Funds Management Limited (formerly DB RREEF Funds Management Limited)
- EG Funds Management Pty Ltd
- Franklin Templeton Investments Australia Limited
- LaSalle Investment Management (Securities) L.P.
- Vanguard Investments Australia Ltd
Australian Fixed Interest & Cash
- Deutsche Asset Management (Australia) Limited
- New South Wales Treasury Corporation
- State Street Global Advisors, Australia, Limited
International Fixed Interest
- State Street Global Advisors, Australia, Limited
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Investment Reserves
The Trustee Board has determined investment earnings will not be placed in an investment reserve. Therefore all available investment gains or losses, after providing for tax and investment expenses, are distributed to employers and members, based on a declared rate which is determined monthly. When a member leaves their STC Scheme, a daily interim rate is applied, where appropriate.
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Derivatives
Derivatives, including futures and options, can be used by fund managers. However, investment mandates clearly state that derivatives may only be used to facilitate efficient cash flow management or to hedge the portfolio against adverse market movements and cannot be used for speculative purposes or gearing the investment portfolio. During the year to 30 June 2010, the managers made limited use of derivatives, except for the passive rebalancing program which makes extensive use of index futures.
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Hedging
The Trustee Board’s policy in regard to currency hedging is:
- international fixed interest: 100% hedged into Australian dollars.
- international equities: specialist currency managers have been engaged to manage the currency exposure of international equities. During the year ended 30 June 2010, the level of hedging was able to vary from 0% up to 70%.
- Other international assets and securitites : To 31 December 2009, 100% hedged into Australian dollars.
From 1 January 2010, the level of hedging was able to vary from 50% to 100%
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Custodian
The Trustee Board engages JPMorgan Chase Bank, NA as custodian to hold Pooled Fund assets. The custodian values assets daily and monitors each investment manager’s daily activity to ensure compliance with their investment mandate.
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Large investments
During the year to 30 June 2010, there was no individual investment directly held by the Pooled Fund that exceeded 5% of total investments.
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Passive Rebalancing
The tradeable asset classes of the Pooled Fund are passively rebalanced in a disciplined manner. Each day after the portfolio is valued, the index manager - State Street Global Advisors, Australia, Limited - reviews the asset allocation for each strategy. If a sector has deviated outside a set range relative to the target allocation, the manager reallocates funds between sectors to return allocations within the agreed range. This rebalancing process may involve the use of derivatives.
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Asset Consultant
The Trustee Board engages Frontier Investment Consulting Pty Ltd as investment consultant advising on strategic asset allocation and fund manager selection.
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