Is it possible for a human being to manage an absolute-returns fund? If you believe the latest behavioural finance research, it must be very difficult.
The $32 billion United Nations Joint Staff Pension Fund has outperformed due to a commitment to active management, a willingness to invest away from the trending market, and a realistic target return. (click on the photo for more…)
The A$25 billion ($21 billion) UniSuper is revolutionising its $4 billion international equities portfolio, terminating every active developed markets manager in favour of passively tracking the MSCI World, while alpha is sought among specialist regional and sectoral managers, with a listed technology mandate to be first cab off the rank.
The chief investment officer of UniSuper, John Pearce, said the overhaul had been in progress over several months, given the volume of assets involved.
“This move is not an argument for passive management: myself and my team here are big believers in active management. It’s just a question of where will the allocation of our research time to find the best active managers yield the best results,” Pearce said.
“And at this stage, we don’t believe that’s in developed-market equities mandates.”
About 10 such mandates have been terminated by UniSuper over the course of 2010, with the money sitting passively for now, awaiting a risk budget re-allocation which will seek more specialist exposures to regions or sectors where Pearce’s team believes there is value to be added.
A specialist technology manager is currently being sought, with Pearce reasoning that this was a natural area of underweight for Australian investors given the market’s scarcity of technology stocks.
UniSuper has maintained its existing active emerging markets mandates, meaning houses such as GMO, Mondrian and Treasury Asia Asset Management continue to run money for the big industry fund.
Quantitative investing needs to change, and should do so by scaling up to produce more proprietary data, reducing excessive numbers of signals and becoming more “market savvy”, according to the global head of equity research at BlackRock, Ronald Kahn. (more…)
The $32 billion United Nations Joint Staff Pension Fund has outperformed due to a commitment to active management, a willingness to invest away from the trending market, and a realistic target return.
Numerous regulatory and legislative activity is affecting 401(k) plans in the US. Fee disclosure, target date fund disclosure and a rule on the provision of investment advice are areas with consequences for plan sponsors and participants.