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Q&A with Roger McIntosh, Head of Investments at LUCRF Super

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Roger McIntosh

Roger McIntosh, Head of Investments at LUCRF Super

This interview will appear in the 2Q Y2014 (July 2014) Superannuation World issue of the Sovereign Wealth Quarterly.

This is a Q&A with Roger McIntosh, Head of Investments at LUCRF

1. In the past five years, how has the Australian superannuation investor class evolved when it comes to institutional investing?

There has been an increasing level of sophistication in developing, implementing and evaluating strategies across all asset classes. Superannuation investors are more critically appraising the suitability of a manager’s approach in a whole-of-strategy context, not just in isolation. Investment managers are trying to align with superannuation investors’ strategy and aiming to position themselves as investment solutions implementers, rather than just providing products. The increased reporting and governance requirements in the regulatory regime has also increased the level of knowledge and importance of investment risk as a primary input into the construction of investment strategies and required enhanced investment risk management systems and processes.

Having a statement of ESG beliefs and incorporating this as part of the investment process is important as companies who better manage ESG issues will provide opportunities for enhanced long term investment performance.

2. Many U.S. public pensions heavily rely on external managers; do you see more of the large superannuation funds bringing investment capabilities internally or the reverse?

There will be some continuing increase in internal investment management, but the majority of funds will continue to rely on external managers.

The factors that lead to internalisation will be Fund dependent: the quality and experience of the investment team leadership; the degree of interaction and trust from the investment committee; an appropriate risk management framework and an objective performance measurement framework. Bringing investment management in-house cannot be justified purely from a cost basis as there has been long term pressure on investment managers fees to decline.

For larger funds, there is more movement towards increasing internal investment capabilities because of a perception of manager capacity constraint, particularly within the domestic equity market. The challenge will be ability to attract and retain sufficiently skilled staff in a competitive environment, not just front office staff, but the middle and back office support functions. I believe there will be a more hybrid approach with some functions managed internally based on strategy, research and asset selection and increasingly sophisticated control of tailoring portfolio exposures in conjunction with external managers implementing more customised strategies.

3. When selecting investment managers and partners, what criteria are essential to you?[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Follow the Money – Episode 45

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This longer-than-normal episode covers a wide range of issues including such as sovereign wealth funds, bitcoin, cryptocurrencies, Indian real estate, ESG, investment exclusions, central banking and more.

EPISODE 45

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The views in this media are expressed by Michael Maduell and other participants and are not reflective of the Sovereign Wealth Fund Institute (SWFI).

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CalPERS Board Elects Priya Mathur as Board President

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The board of the California Public Employees’ Retirement System (CalPERS) elected Priya Mathur as board president. The current president Rob Feckner was named vice president of the board. Feckner previously served as board president and vice president.

Priya Mathur is serving her fourth term on the CalPERS Board of Administration. Mathur is a principal financial analyst for Bay Area Rapid Transit District (BART). Mathur represents public employees on the CalPERS Board, which she joined in 2002. She currently serves on four committees: Governance, Investment, Pension & Health Benefits, and Risk & Audit. She chairs the Pension & Health Benefits Committee and is vice chair of the Governance Committee.

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Oman SGRF Contemplates $1 Billion Infrastructure Fund

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Oman’s State General Reserve Fund (SGRF) is in discussions on forming a US$ 1 billion infrastructure fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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