State Super has awarded an All China Equity mandate to Ninety One, formerly Investec Asset Management, following an extensive tender process as the fund sought ‘niche opportunities’ for its portfolio.
The superannuation fund was seeking equity options for its Global Best Ideas satellite manager portfolio and decided an All Shares approach had the potential for high alpha while diversifying beta. Ninety One also had very high standards of ESG integration in its portfolio construction and corporate engagement.
State Super senior investment manager Andrew Huang, said: “We canvassed the marketplace for equity strategies targeting an attractive segment of the global investment universe. An All Shares approach to China was the most compelling due to the high alpha potential while diversifying beta. Skilled alpha hunters should thrive well in this broad and highly inefficient retail drive market”.
Ninety One ran a 4Factor investment process which recognised the importance China would play in a global investment universe and had a high conviction portfolio of 30 to 50 Chinese companies that had strong quality, earnings, value and technical characteristics.
Justin Cowper, head of institutional business for Ninety One in Asia Pacific and the Middle East, said many Aussie institutional investors had a tendency to resist allocations to Chinese equities but that State Super had bucked this trend.
“In the past, many Australian institutional investors have resisted a discrete allocation to Chinese Equities, given China’s close trading links to Australia and the potential double up in exposure through their Australian equities and emerging markets allocations,” Cowper said.
“State Super have led the way in evolving from this thinking and seeing the potential in the China A shares market, which allows investors access to the true nature of the Chinese market.”