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 2007 were:
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. Members leaving the STC Schemes receive a daily crediting rate applicable since the last monthly rate was struck.
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 2007, the managers made limited use
of derivatives.
The Trustee Board’s policy in regard to currency hedging is:
The Trustee Board engages JPMorgan Investor Services 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.
During the year, there was no individual investment directly held by the Pooled Fund that exceeded 5% of total investments.
However, 5.9% of total
investments were held in the Emerging Managers Trust, an unlisted unit trust managed by New South Wales Treasury Corporation which engages Australian equity managers.
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 futures or derivatives.
The Trustee Board engages Frontier Investment Consulting Pty Ltd as investment consultant advising on strategic asset allocation and fund manager selection.
