Morningstar backs ART in $500bn growth target

Morningstar believes Australian Retirement Trust’s ambition to grow to $500 billion is “not unrealistic” and praises CIO Ian Patrick for his leadership of the investment team.

ART was formed from the merger of QSuper and Sunsuper last February and currently has $260 billion in assets under management, helped by several smaller mergers with Commonwealth Bank Group and successor fund transfers with Woolworths Group and Endeavour Group.

It also set to enact future mergers with Alcoa Super and AvSuper.

The research house praised the fund for its efforts in merging the two funds successfully and upgraded four of its multi-sector funds. 

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These were ART Super Savings Growth, ART Super Savings Balanced, ART Super Savings Retirement, and ART Super Savings Conservative.

It said: “Merging two large investment teams was an ambitious undertaking and we have gained confidence in the achievements so far. The teams are culturally integrated and supported under Patrick’s inclusive leadership style. They have a strong drive to continue leveraging their strategic partnerships and they continue to show astuteness in the quality of their manager line-up.

“The asset growth ambitions of $500 billion for ART by 2030 are not unrealistic. Merger integration work continues and key milestones left to achieve include the custody transition. The extent of the merger benefits is still to be fully realised and remains an incremental, multiyear process.”

Patrick has worked at the fund since November 2015, initially as CIO of Sunsuper, and previously spent 13 years at JANA Investment Advisers.

However, it flagged several watch points regarding the legacy of Sunsuper and QSuper assets and capacity within the Australian equities investment team. 

But it said any capacity risks are offset by the fund’s exposure to passive or index funds within its public markets allocation that allows active risk and fee budgets to be spent on manager selection and long-term alpha generators in private markets and global real assets that require more due diligence.

“ART is costlier than some rivals, but its net performance outcomes have been rewarding for members. We think ART has a strong investment team with an established investment process, raising our conviction in its multi-asset offering,” it said.