AustralianSuper has finalised a review of Westscheme's alternative assets and they will now be assessed as part of the superannuation fund's overall portfolio.
"AustralianSuper has integrated all of Westscheme's infrastructure and private equity mandates into the portfolio," AustralianSuper chief investment officer Mark Delaney told Investor Weekly.
"They now form part of the AustralianSuper portfolio and as such will be reviewed and assessed like every other investment the fund has."
The fund's annual report published last month showed it had experienced a strong increase in private equity and infrastructure managers, adding 24 new private equity, 15 new property and 19 new infrastructure investments.
Delaney said most of those mandates came across from Westscheme.
"This transfer formed the majority of 'new' activity for the fund, in these asset classes, for the 2010/11 year," he said.
The transfer also includes a number of directly-held investments, including investments in Moto Hospitality International and Transact Communications.
Compared to the super fund industry average, Westscheme had a relatively high allocation to alternative assets, which were mostly held in its target return portfolio (TRP).
But the fund's annual report for the year to 30 June 2011, Westscheme's last report, was frank about the downside of this exposure.
"Investments in illiquid assets held in the TRP were 'unlisted'. There was no market in which these assets could be traded quickly," the fund said.
"It may have taken up to 180 days to sell and realise the 'fair value' of such illiquid investments into cash. However, the law required benefit withdrawals and rollovers from Westscheme to be paid in 30 days.
"In addition, Westscheme undertook to effect investment option switches on the first day of the month following the month in which the switch form was received.
"Complying with these requirements could have resulted in the related illiquid investments being paid out or switched at less than their 'fair value'."
Westscheme's asset consultant Access Capital has been advising on the transition of the assets.
But Access would not be retained, an AustralianSuper spokesperson said.
"We are working with Access Capital to just finalise the transition. There is no ongoing role for Access," the spokesperson said.
AustralianSuper uses JANA and Frontier as asset consultants. It also has an extensive in-house team, which it continues to expand.
Recently, the fund appointed Innes McKeand in the newly-created role of head of equities, and last week AustralianSuper advertised for another new role, namely that of senior manager for asset allocation.
"The person who is appointed will head up the asset allocation team and initially have two direct reports, who have been with the fund for some time," the spokesperson said.
"They will report directly to the chief investment officer, Mark Delaney, and oversee all activities related to the strategic asset allocation and economic research."
Delaney indicated the role would look at managing portfolio tilts and overlays.
"We believe [the new role] will enhance our capability to identify new areas of opportunity, especially in the scalable areas of asset allocation, sector tilts and other broad overlays," he said.
AustralianSuper and Westscheme officially merged one minute to midnight on 30 June, thereby just scrapping into the 2011 financial year.
The transaction saw the transfer of 215,345 Westscheme members, $3.5 billion in member funds and $3.5 billion in liabilities into a separate West Australian division.
