HESTA embarks on the next phase of its ambitious internalisation strategy

HESTA has reached a key milestone, with its in-house Australian Equities team actively investing as the $68 billion industry superannuation fund embarks on the next phase of its ambitious internalisation investment program.

Plans to bring its fixed interest and cash teams in-house are well underway, with HESTA targeting at least 15 percent of its portfolio being internally managed in the short-to-medium term.

HESTA CEO Debby Blakey said the fund’s hybrid strategy – which combines direct investment capability alongside leading external asset managers – aims to continue generating strong, competitive, long-term investment performance at a lower cost, directly benefitting members.

“This is an exciting and new chapter for our fund that builds on a track record of delivering outstanding investment performance for members," Ms Blakey said.

“Our internal asset management team will help bring us even closer to capital markets, giving us greater access to cutting-edge global investment thinking. This will help us continue to deliver strong, long-term returns and ensure members’ investments are well positioned for a dynamically changing world.”

HESTA CIO Sonya Sawtell-Rickson said the internalisation program aims to enhance investment thinking across the whole portfolio, as well as its responsible investment activities, with its internal Australian equities team to strengthen the fund’s established direct engagement program.

“Our HESTA impact program has a strong focus on identifying investment opportunities arising from long-term sustainability trends such as the transition to a low carbon future and the outperformance companies with strong, inclusive and diverse cultures can achieve," Ms Sawtell-Rickson said.

“We’re well placed to continue developing first-hand knowledge of company business models that can increase our ability to generate competitive, sustainable returns, while amplifying the positive impact we can have on behalf of members."

The internalisation program resulted in a new leadership structure with a number of key appointments made over the last two years including general m for growth assets Steven Semczyszyn, who joined in 2020, to lead the internal Australian Equities team. 

“Our senior leadership structure has been carefully designed to help deliver the overall investment program and portfolio strategy and is aimed at enhancing an innovative, leading investment team, with plans to support future growth in capability and capacity," Ms Sawtell-Rickson said.

The fund has further invested in its systems and data, including the implementation of a whole-of-fund portfolio management system which can be leveraged for internalisation across asset classes.

“We’re bringing in some of the best and brightest minds to help manage a growing and significant pool of assets. Over the next two years we plan to have half of the active Australian Equities money managed in-house," Ms Sawtell-Rickson said.

Recruitment of the fund’s fixed interest and cash teams is well underway and expected to be fully operational by late 2022.

“We’re continuing to build capability across a range of asset classes that will allow us to keep delivering outstanding results for members,” Ms Sawtell-Rickson said.

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