State Super has announced it has awarded a large Australian equity income mandate to Omega Global Investors’ Smart Beta plus-based strategy.
The move would be expected to help offer a commercially attractive core equity portfolio with enhanced income and downside protection.
State Super’s senior investments manager, Andrew Huang, said the fund worked closely with Omega to help meet the needs of its large base of members approaching retirement age.
“Omega worked with us to design a well-integrated strategy that combines factor investing and an option overlay in a transparent way,” he said.
According to Omega’s portfolio manager, Andrew Gruskin, the key aspects of his firm’s approach included:
- 100 per cent stock equity exposure but with a lower beta via the options overlay strategy;
- A high yield derived from dividend income (including franking credits) and option income; and
- Fewer concentration risks present in the underlying portfolio as the strategy does not rely on rotation of the portfolio for dividend run-up purposes in order to increase its income yield.
“Our strategy development required not only taking a holistic view of investable markets, but carefully interrogating the underlying factors that drive the stated investment outcomes for the benefit pf investors,” Gruskin said.