Greater certainty is key to taking a long-term approach to investing
Global Investment Insights
with Damian Graham, Chief Investment Officer, Aware Super
Damian is the Chief Investment Officer of Aware Super, with responsibility for the fund’s investment strategy and a team of investment specialists who manage the investment portfolios across all asset classes. In this capacity, Damian’s remit is quite broad, working with the board, the executive and the heads of all areas of the portfolio; including governance, strategy, equities, private markets, income and real assets, liquidity management and responsible investing; to implement the overall investment strategy.
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We believe we can do well for our members, while being a true ‘force for good’ in our community.
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The fund’s strategy seeks to deliver strong and sustainable long-term returns. “We believe we can do well for our members, while being a true ‘force for good’ in our community”, Damian stated. Hence, the CIO role necessitates the blending of these two focuses. Ultimately, the strategy is owned by the board and the investment committee, so there is also a focus on working with the directors to ensure the strategy is implemented appropriately and within the fund’s risk appetite.
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Ultimately, the strategy is owned by the board and the investment committee.
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Aware Super tends to have areas of research defined to support the ongoing allocation of investment capital to areas where they feel they have supportive dynamics, those that are investible at scale and those that can generate strong long-term returns to members.
This framework has led the fund to seek out investment opportunities in areas such as industrial property by assessing the impact online retailing has had on the asset class, land registries, affordable housing, the transition to a low-carbon economy, healthcare and digital infrastructure. They have also sought to diversify their portfolio geographically, which has led the fund to deploy capital into regions such as Brazil and China.
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Geographical diversification has led the fund to deploy capital into regions such as Brazil and China.
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More recently, issues raised by COVID-19 have led the fund to define a number of their research focuses towards better understanding how the global economy may emerge stronger and more sustainably from the current crisis, so as to inform their investment strategy and position their portfolio to capitalise on opportunities as they arise.
Overall, the fund is gradually looking to add to their allocation of illiquid assets, but prefer to utilise a bottom-up approach to defining new areas of opportunity to allocate to within their targeted asset allocation.
“We think that as we have built up more direct investing capability within our investment team, we are increasingly able to find and acquire assets in areas that offer attractive long-term opportunity”, Damian remarked.
Some areas of focus where Aware Super is actively looking for investable opportunities include affordable housing, renewables and new technologies, and providing small to medium-sized businesses with much need growth-capital to scale up.
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Overall, the fund is gradually looking to add to their allocation of illiquid assets.
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We talk a lot about being long-term investors and utilising the opportunity that a compulsory superannuation system should afford us. Yet, there are some structural issues that can push us to be more short-term focused and, if poorly considered, can impact our ability to attain desired long-term outcomes, Damian believes.
Taking a longer-term approach is the best way to allocate capital and risk to investments that can benefit, what should be, the natural advantages of our retirement savings system. To that end, anything that supports the ability for us to invest with greater certainty, particularly regarding policies such as climate policy, can support this type of outcome.
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Anything that supports the ability for us to invest with greater certainty, supports us in taking a longer-term approach, which is the best way to allocate capital and risk to investments.
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Damian left us with one of his key lessons learned from having managed an investment business in the lead up to the Global Financial Crisis (GFC).
“I had been involved in investment markets for many years before the GFC, but the additional challenge of being in charge through that period was impactful in many ways. The business I was working for had many clients and we spent a lot of time talking to them through that period and it certainly brought the market losses into sharp relief”, Damian recalled.
The key lesson being, to never forget who we are looking after when we make investment decisions and to try to always put ourselves in the shoes of our members.
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The key lesson being to never forget who we are looking after when we make investment decisions and to try to always put ourselves in the shoes of our members.
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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.
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