Australia’s second largest industry superannuation fund, Australian Retirement Trust (ART), has distinguished itself by receiving upgrades across four of its multi-sector offerings from leading research and ratings house, Morningstar.
Morningstar upgraded the ART products within its Medalist Ratings from Bronze to Silver, while the only other fund manager to receive an upgrade from Morningstar was Perpetual with one product upgraded from Bronze to Gold while another was upgraded from Silver to Gold.
The Morningstar ratings come at a time when there is vigorous discussion around the degree to which superannuation funds have altered the texture of the Australian funds management sector by taking investment management in-house.
The Morningstar assessments drive home how well the research house thinks ART is doing, stating that its multi-sector strategies “are underpinned by a solid investment process and high-calibre team producing sound return outcomes for its members.
What is more, it said that ART’s asset growth ambitions of $500 billion by 2030 are not unrealistic.
It said the fund’s Chief Investment Officer, Ian Patrick was “capable and supported by a senior investment team in a collegiate culture”.
Referencing the fact that ART grew out of the merger of QSuper and Sunsuper, the Morningstar assessment said that merging two large investment teams was an ambitious undertaking but it had gained confidence in the achievements so far.
“The investment process is well-designed and pragmatically applied to achieve the options’ return objectives. Key watch points remain the pending asset integration of legacy Sunsuper and QSuper assets and capacity management within Australian equities,” it said.
“That said, capacity risks are offset somewhat by the 40%-50% exposure to passive/enhanced indexation within its public markets’ allocations. It allows the active risk and fee budgets to be spent on manager selection and its long-term alpha generators—private markets and global real assets. These are seen as key assets for members in achieving retirement outcomes.”
“The global real assets and private assets (equity and debt) books are sizeable, with commensurate risks in terms of liquidity, valuation, and execution, thus requiring more extensive due diligence and a focus on quality partnerships. ART has invested in the teams and functions accordingly. Risk management overall within the investment process is solid, and the approach to asset valuations appears prudent and rigorous.”
“Despite ART’s scale, investment fees will potentially see incremental reductions from here, with clear visibility on the extent in a few years’ time. Overall, ART is costlier than some rivals, but its net performance outcomes have been rewarding for members. We think, in the context of the points above, ART has a strong investment team with an established investment process, raising our conviction in its multi-asset offering.”
