The opportunity for smaller funds: Playing to strengths

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Global Investment Insights

with Andrew Proebstl, Chief Executive, legalsuper

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Andrew is the Chief Executive of legalsuper, a position he has held since his appointment in January 2003. He reports directly to the legalsuper Board and has more than 30 years of superannuation experience.

Legalsuper (the Fund) manages the retirement wealth of the legal community, representing more than 41,000 members and with more than AU$5 billion in assets under management.

A key focus for Andrew and the Fund at the present time and on an ongoing basis is their people. “Our people are the enablers of our vision”, Andrew stated.

*****

We are agile and determinedly seek out investment opportunities not accessible by larger funds. Ultimately, this is the cornerstone to us delivering strong long-term returns to our members.

*****

During the pandemic (and continuing forward), the Fund’s focus has been on ensuring clarity of purpose to ensure that across the team there is a shared vision, they have supported the health and wellbeing of their people and reinvented the way they work.

Several specific initiatives that the Fund has implemented to ensure their staff are supported have included:

Conducted regular team-pulse check surveys to help track the ‘team vibe’ and enable a quick and appropriate response when needed;
Implemented a buddy system roster whereby each week team members connect to share experiences and empathise with each other to create a supportive and richer connection;
Care packs sent to team members suffering with COVID-19; and,
Invested in leadership training for team members, building their capability in the new landscape to think strategically, creatively and differently.

“Have we finished our people journey? No. I don’t think it ever stops! Onwards and upwards. Being high performing in everything we do is the main game”, Andrew highlighted.

Aside from investing in their people to ensure high performance, one of the other advantages for the fund has been its size. Being smaller (in peer-relative terms) has given them the ability to think differently, be innovative and access opportunities not on offer to larger funds.

“We have a passion for innovation in how we invest and operate. We are agile and determinedly seek out investment opportunities not accessible by larger funds. Ultimately, this is the cornerstone to us delivering strong long-term returns to our members”, Andrew emphasised.

*****

We see institutional-quality investment opportunities which were not on the radar only five years ago in digital infrastructure, healthcare property and agri-tech platforms.

*****

The ability to be innovative is particularly relevant in an industry that is constantly undergoing change and where the range of investible asset classes is growing every day.

“We see institutional-quality investment opportunities which were not on the radar only five years ago in digital infrastructure, healthcare property and agri-tech platforms, for example. These emerging opportunities can be small with limited ability to invest at scale, however our scale means we can, not only access these opportunities, but invest in proportions that make a meaningful contribution to performance”, Andrew explained.

“As a general thematic, we are positively inclined to asset classes that have potential to generate outsized return for risk characteristics due to capacity constraints or capital scarcity. Furthermore, we are keen to grow allocations to the beneficiaries of secular trends including global decarbonisation, digital economies and rising demand for personalised healthcare”, Andrew stated.

He continued, “we are also excited about the keen and growing interest of investment managers to enter into strategic partnerships with smaller funds like legalsuper. These rewarding partnerships enrich our core investment manager relationship with other capabilities including member experience and education and shares research and insights which help us improve our business.”

*****

We are excited about the keen and growing interest of investment managers to enter into strategic partnerships with smaller funds like legalsuper.

*****

However, the complexity of super poses as a key structural challenge to the Fund and the industry broadly.

The complexity of super reduces member engagement and requires very significant investment by superannuation funds in publications, tools and people to make it digestible to members.

To varying extents, super funds provide advice to reduce the complexity of super but in most cases this is for a very small proportion of members. Financial advisers are another avenue, but most members do not want to pay for financial advice. The opportunity is to provide information and advice that directly improves member outcomes.

“At legalsuper we are focused on cutting through the complexity of super. Our members are busy and time poor. They want us to proactively bring ‘bite sized’ pieces of information at the right time via the channel the member wants. They want us to proactively check in with them at important life-stages to make better decisions about their savings to achieve their objectives”, Andrew explained.

*****

As a general thematic, we are positively inclined to asset classes that have potential to generate outsized return for risk characteristics due to capacity constraints or capital scarcity.

*****

Notwithstanding that legalsuper is a smaller fund, they offer competitive products and services that position them well for the future, in an increasingly competitive and consolidating industry.

Legalsuper’s returns are first quartile (FY & 1 year to 31 Jan 22), with fee levels around industry median. They offer high levels of personal service, including providing direct access to experienced superannuation professionals for their members seeking advice.

“Our direct investment option gives members greater control over how their savings are invested, choosing from one of the industry’s longest menu of securities including shares, exchange traded funds, listed investment companies and bank deposits”, Andrew highlighted.

*****

We are keen to grow allocations to the beneficiaries of secular trends including global decarbonisation, digital economies and rising demand for personalised healthcare.

*****

“Over the thirty-four years I have worked in the super industry (scary!), the industry has year-on-year told itself that the level of change must surely have peaked! And yet, the rate and extent of change has continued to increase. The bar has risen for the super industry. Our industry is continually being expected to do more and to drive down fees. It is important to be clear about what is important and to judiciously allocate resources and time.

Only funds that are creative, innovative and high performing will have a seat at the table. We are investing in our people and building rewarding partnerships with our advisers to holistically drive high performance across our organisation.

When we recruit, candidates tell us that one of the main reasons they want to work with legalsuper is that they want to have more ownership and direct contribution to the member outcomes we deliver.

For some, big organisations can have a lot of bureaucracy and can be less attractive compared to smaller funds. There is a real opportunity here for smaller funds to be very different in how they operate and perform by playing to their strengths”, Andrew concluded.

*****

There is a real opportunity for smaller funds to be very different in how they operate and perform by playing to their strengths.

*****

Andrew Proebstl, Chief Executive, legalsuper

Andrew was appointed as Chief Executive of legalsuper in January 2003. He reports directly to the Board and has more than 30 years of superannuation experience.

Legalsuper manages the retirement wealth of the legal community, representing more than 41,000 members and with more than AU$5 billion in assets under management.

Qualifying as a Chartered Accountant while at Arthur Andersen, Andrew has broad experience across the superannuation industry with fund administrators, investment managers, custodians and superannuation funds. Andrew is a member of the Member Services Committee of the Australian Institute of Superannuation Trustees and Finance & Investment Committee of the Law Institute of Victoria. He is also a former Director of Australian Institute of Superannuation Trustees, former member of the Strategy & Policy Committee of the Australian Institute of Superannuation Trustees and former member of the Victorian Executive of the Association of Superannuation Funds of Australia.

Disclaimer

All information contained within this publication is general advice only, as the knowledge levels and needs of all individual and corporate investors vary greatly this publication should not be used solely as a decision-making tool, further opinions and information should be sought before making an investment decision. It is the recommendation of Global Investment Institute (GII) that you seek the opinions of a fee-for-service, independent investment adviser before making any investment decision.

The authors, directors or guest writers may have a financial interest as investors, trustees or directors in investments discussed or recommended in this document. It has been assessed by the editors that these financial interests have not had an impact on the material contained here within.

All material appearing in GII’s Global Investment Insights is copyright, reproduction in whole or part is not permitted without written permission from the Publisher, GII.

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Zlatan Kapetanovic22 March 2022investing, investment, superannuation, pensions, institutional, asset owner, investment managers, fund managers, portfolio management

The opportunity for smaller funds: Playing to strengths

Global Investment Insights

with Andrew Proebstl, Chief Executive, legalsuper

Andrew is the Chief Executive of legalsuper, a position he has held since his appointment in January 2003. He reports directly to the legalsuper Board and has more than 30 years of superannuation experience.

Legalsuper (the Fund) manages the retirement wealth of the legal community, representing more than 41,000 members and with more than AU$5 billion in assets under management.

A key focus for Andrew and the Fund at the present time and on an ongoing basis is their people. “Our people are the enablers of our vision”, Andrew stated.

*****

We are agile and determinedly seek out investment opportunities not accessible by larger funds. Ultimately, this is the cornerstone to us delivering strong long-term returns to our members.

*****

During the pandemic (and continuing forward), the Fund’s focus has been on ensuring clarity of purpose to ensure that across the team there is a shared vision, they have supported the health and wellbeing of their people and reinvented the way they work.

Several specific initiatives that the Fund has implemented to ensure their staff are supported have included:

Conducted regular team-pulse check surveys to help track the ‘team vibe’ and enable a quick and appropriate response when needed;

Implemented a buddy system roster whereby each week team members connect to share experiences and empathise with each other to create a supportive and richer connection;

Care packs sent to team members suffering with COVID-19; and,

Invested in leadership training for team members, building their capability in the new landscape to think strategically, creatively and differently.

“Have we finished our people journey? No. I don’t think it ever stops! Onwards and upwards. Being high performing in everything we do is the main game”, Andrew highlighted.

Aside from investing in their people to ensure high performance, one of the other advantages for the fund has been its size. Being smaller (in peer-relative terms) has given them the ability to think differently, be innovative and access opportunities not on offer to larger funds.

“We have a passion for innovation in how we invest and operate. We are agile and determinedly seek out investment opportunities not accessible by larger funds. Ultimately, this is the cornerstone to us delivering strong long-term returns to our members”, Andrew emphasised.

*****

We see institutional-quality investment opportunities which were not on the radar only five years ago in digital infrastructure, healthcare property and agri-tech platforms.

*****

The ability to be innovative is particularly relevant in an industry that is constantly undergoing change and where the range of investible asset classes is growing every day.

*****

We are excited about the keen and growing interest of investment managers to enter into strategic partnerships with smaller funds like legalsuper.

*****

However, the complexity of super poses as a key structural challenge to the Fund and the industry broadly.

The complexity of super reduces member engagement and requires very significant investment by superannuation funds in publications, tools and people to make it digestible to members.

*****

As a general thematic, we are positively inclined to asset classes that have potential to generate outsized return for risk characteristics due to capacity constraints or capital scarcity.

*****

Notwithstanding that legalsuper is a smaller fund, they offer competitive products and services that position them well for the future, in an increasingly competitive and consolidating industry.

Legalsuper’s returns are first quartile (FY & 1 year to 31 Jan 22), with fee levels around industry median. They offer high levels of personal service, including providing direct access to experienced superannuation professionals for their members seeking advice.

“Our direct investment option gives members greater control over how their savings are invested, choosing from one of the industry’s longest menu of securities including shares, exchange traded funds, listed investment companies and bank deposits”, Andrew highlighted.

*****

We are keen to grow allocations to the beneficiaries of secular trends including global decarbonisation, digital economies and rising demand for personalised healthcare.

*****

Only funds that are creative, innovative and high performing will have a seat at the table. We are investing in our people and building rewarding partnerships with our advisers to holistically drive high performance across our organisation.

When we recruit, candidates tell us that one of the main reasons they want to work with legalsuper is that they want to have more ownership and direct contribution to the member outcomes we deliver.

For some, big organisations can have a lot of bureaucracy and can be less attractive compared to smaller funds. There is a real opportunity here for smaller funds to be very different in how they operate and perform by playing to their strengths”, Andrew concluded.

*****

There is a real opportunity for smaller funds to be very different in how they operate and perform by playing to their strengths.

*****

Andrew Proebstl, Chief Executive, legalsuper

Andrew was appointed as Chief Executive of legalsuper in January 2003. He reports directly to the Board and has more than 30 years of superannuation experience.

Legalsuper manages the retirement wealth of the legal community, representing more than 41,000 members and with more than AU$5 billion in assets under management.