A chief architect of the A$68 billion ($60 billion) Australian Future Fund‘s investment strategy will leave in two weeks to form a new business offering asset allocation and macroeconomic strategy advice to large fiduciary investors globally.
Tony Day, who joined the Future Fund in its early days of 2007, said that at 44 years of age and a career entirely in the public service, it was time to “chance his arm” in the free markets in which he so passionately believed.
He said he hopes he will continue to generate ideas for the sovereign wealth fund, which in the meantime will replace him with his understudy.
Day will go it alone in a new business offering asset allocation and macroeconomic strategy advice to large fiduciary investors. He said he was “in negotiations” for the Future Fund to be an early client, as well as other major institutions, both here and overseas, with whom he dealt during his tenure at Future Fund and before that in his 12 years as chief strategist for Queensland Investment Corporation.
Day will be replaced by the Future Fund‘s current senior strategist, Stephen Gilmore, who joined last August after previous experience with Morgan Stanley, AIG Financial Products, International Monetary Fund and the Reserve Bank of New Zealand.
Day hoped that the Future Fund would “continue to get the best third of what I do”, which was generating thematic investment ideas as opposed to being part of a senior management team.
“It’s probably no secret to anyone that I’ve got a distaste for bureaucracy,” he said. “But the guys [at the Future Fund] have set up a fantastic mandate,” he said.
The chief investment officer of the Future Fund, David Neal, said that Day had “played a critical role during the important establishment phase of the Fund, building a highly skilled team, shaping the long-term asset allocation and helping to protect and grow the Fund in an enormously challenging environment.”
Asked to name the highlight of his Future Fund tenure, Day said it was “hard to beat” the decision to pause the process of getting set in equities in late 2008.
The Fund instead maintained a high weighting to cash, and so was one of the world’s few investors to make a positive absolute return for 2008-09.
“There was that myth around that we got lucky, but I can tell you, we’d been on the march to 70 per cent [growth assets exposure] and to stop it was a really big team call,” Day remembered.
He added it was a “false rumour” that any former QIC colleagues would join him in his new venture, insisting he wished to “keep it small and focussed”.