Australia’s biggest super funds disagree on what the new Your Future, Your Super performance test should look like, but they both think the consequences for failure should be just as weighty – and apply to everybody equally.
The $280 billion ART has become the latest megafund to set up an offshore outpost as it looks to secure “even more compelling investment opportunities” for its 2.3 million members.
CFM diversifies Aussie distribution
Philippe Jordan
Capital Fund Management (CFM), the Paris-based global hedge fund manager, which has been attracting Australian institutional interest over the past seven years, will launch its first local retail offering this week, which blends six alternative beta strategies.
The fund – the ‘CFM Institutional Systematic Diversified Trust’ – is being distributed by Winston Capital to the small super fund and retail markets. The fund will accept amounts as low as $50,000 and offers weekly liquidity.
Stephen Robertson, the founding partner and managing director of Winston Capital, said there was also a good chance CFM would be launching a second retail strategy for Australia.
“We think there is a demand by people looking for a cornerstone alternatives strategy in their portfolio – something which is simple, transparent and value for money,” he said. For big super funds and fiduciaries, the six strategies in the new fund are available as individual “sleeves”.
Robertson organised for Philippe Jordan, London-based CFM partner, to speak with various researchers, family office representatives and dealer group executives in Australia last week. Robertson said he would commence a more general “roll-out” to other intermediaries in the new year.
CFM and Jordan have been visiting regularly since 2008, when Australia seemed a rare light on the horizon for European and US-based global managers. It has several Australian institutional clients, Jordan says. A portfolio manager tends to visit several times a year and Steve Shepherd, the regional head based in Tokyo, is also a regular visitor.
The firm, established in 1991, has an unusual history and management style, which is very research oriented, applying an academic and scientific approach to financial markets. It is majority owned by management. It operates ‘data centres’ in New York, London, Chicago, Frankfurt. Tokyo and Paris, with engineers looking after the hardware and operational areas.
The six alternative beta strategies in the new fund are: three market-neutral strategies; a long-term trend-following strategy; and, two risk premia strategies.
The market-neutral strategies cover the three classic factors of investing: momentum, value and quality. The trend-following strategy, which has been back-tested to an amazing 200 years, can be employed across stocks, fixed income and commodities capitalizing on slow-moving averages. The two risk-premia strategies are FX carry trade and short volatility.
Basically, the new fund diversifies the main factors, which tend to fire at different times of a market cycle. It targets a return of cash plus 5 per cent over an investment cycle. It has a 1 per cent management fee and 10 per cent performance fee.
Jordan, who also spoke at the annual AIMA Australia Hedge Fund Forum in September, said that the diversified factor combination meant that there was enough premia collected every day to cover the big market moves which occurred from time to time in the cycle.
The factors are statistically clean and robust,” he said. “We have a lot of data.”
