John Livanas

State Super, one of Australia’s largest and most trusted superannuation schemes, has acquired a 23% equity stake in Frontier Advisors, a leading institutional investment advisory firm.

This strategic partnership includes a seat for State Super on Frontier’s board, aligning the NSW public sector superannuation fund with other major shareholders – AustralianSuper, Hesta, Cbus and First Super. In an industry first, this acquisition will also facilitate the movement of State Super’s dedicated investment team inside Frontier to create a new Independent Chief Investment Officer, or ‘ICIO’ service, to best support members.

State Super CEO John Livanas said the collaboration between State Super and Frontier will provide members with continuity and security by retaining access to the technical skills of the specialist team already managing their funds.

“We have a great team of professionals managing our portfolio, and as State Super enters into a new transition phase, we’ve devised a solution to retain this valuable investment team so members who’ve entrusted their retirement savings to us receive a continuity of service,” Mr Livanas said.

This inventive solution will deliver greater opportunity for career growth and professional development for State Super’s dedicated investment team, ensuring continuity for staff and allowing the team to remain focused on doing what they do best, delivering great outcomes for members.

“For the Fund, it will be a seamless transition with our innovative solution that enables current advisers and investors to remain operating exactly as they have for over a decade, whilst providing staff a wealth of new opportunities. Our members report a high level of satisfaction, and we are pleased that we can secure this proven capability for State Super and our members into the future.” 

Frontier CEO Andrew Polson, said, “This arrangement ensures that State Super’s decumulation investment expertise remains unconflicted and continues to serve the best interests of its members. Frontier now has added capability and can provide investors with the benefit of retaining control over their own investment policy, strategy and portfolio construction while accessing institutional grade end to end investment services and to maintain our unconflicted advice model in the process.”

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Michael Kollo

Back in 2016, State Super were one of the first Australian pension funds to start developing AI and machine learning models to manage the massive amount of data available to analyse, so as to support decision making in increasingly complex financial markets.

With increasing computing power, and better access to data and software, the use of Data Science is rapidly growing. However, as State Super’s Deputy CIO Charles Wu notes, using insights from more complex machine learning based models requires a strong governance process to avoid building in biases during the learning process, and to challenge the path of future developments.

To address this, State Super has appointed Dr Michael Kollo, Professor David Michayluk and Dr Alex Antic to be the inaugural members of the Academic Oversight Body (AOB). The AOB aims to provide oversight to the development of the investment data science capability. As John Livanas, CEO of State Super explains:

“The challenges faced by our funds, of minimising downside risk while pursuing strong returns, in a liquidity constrained manner, are well known.  Charles and his team have developed machine learning algorithms that have been helping us to effectively assess financial conditions and assist our decision-making processes.

This has led State Super to maintain superior returns, with significantly lowered risk. The Academic Oversight Body will assist State Super’s governance of our machine learning models and grow our investment data science capabilities, at a time when the speed of change in markets, and  development of machine learning and artificial intelligence research increases.”

Dr Michael Kollo, has been appointed as inaugural chair of the Academic Oversight Body. Dr Kollo gained his PhD in Finance from the London School of Economics and has extensive industry experience in the application of quantitative statistical methods at Blackrock, Fidelity, Axa Rosenberg and HESTA. Michael said that:

“The increasing scale and sophistication of capital markets drives asset owners toward using more types of data and new technologies, including AI, to help in their decision making. Having an appropriate governance framework and technical resources to oversee and guide their development not only helps members get a better outcome, it is a way for State Super to tap into the best Australian academic talent.”

The other AOB members include, Professor David Michayluk who is Head of the Finance Department at UTS Business School and earned a PhD in Finance at Louisiana State University, and Dr Alex Antic, who is Head of Data Science at Australian National University.

Reporting to the State Super Management Investment Committee, the AOB will oversee the use of data science and machine learning. Charles Wu, Deputy CIO stated that,

“State Super understands the potential value that the data science program will bring, and a robust governance framework has been developed to ensure the insights are carefully integrated with our investment process and governance framework”.

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State Super Chair Mr Nicholas Johnson said: “Lisbeth Rasmussen is an outstanding investment industry professional. She has been appointed after an extensive search and competitive selection process in which I was closely involved. I am confident that her proven skills will help State Super maintain its superior investment performance and leading Member service standards even in today’s highly challenging Superannuation environment.”

Ms Rasmussen is a senior investment professional who brings to the board more than 30 years’ experience in managing large, complex funds. During this period Ms Rasmussen has held numerous senior roles including CIO, Deputy CIO, Head of Strategy, Investment Manager, and Group Economist in Europe and Australia.

For much of her career, Ms Rasmussen worked with State Super or its predecessors, before retiring as CIO in 2016, and was instrumental in establishing the principles that underpin the portfolios.

State Super’s CEO John Livanas said:  “Having worked with Lisbeth for over five years at State Super, I have the utmost respect for her investments talent, her wonderful humanity and am grateful she has now chosen State Super to pursue her career as a Trustee Director. Her depth of skills, knowledge and curiosity will help guide State Super in this complex environment. Lisbeth’s exemplary ethos in philosophy of investments and in supporting people will further reinforce our strong culture from the top”.

Lisbeth sits as CIO for the Coal Mining Industry (Long Service Leave Funding) Corporation. She is also a former Director of Equipsuper and Togethr Trustees, which was formed following the joint venture between Equipsuper and Catholic Super.

Ms Rasmussen has an economics degree from the University of Copenhagen, a M.Sc. from the University of Bath in Development Studies and is a graduate of the Australian Institute of Company Directors.

On her new role, Ms Rasmussen said: “I feel very privileged to join the Board of State Super. My new role gives me an opportunity to use my experience of investment markets and knowledge of State Super to serve our members and stakeholders to the best of my ability. “

Ms Rasmussen commenced her four-year term in March 2020.

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John Moore

Omega Global Investors is pleased to announce the signing of a core, defensive Australian equity mandate with highly regarded State Super (SAS Trustee Corporation).

State Super has allocated a large investment mandate to Omega’s Smart Beta Plus based strategy, utilising a proprietary, factor-based investment methodology.

Omega welcomes the opportunity to partner with State Super, helping to solve a dual need of delivering a commercially attractive core equity portfolio along with enhanced income and downside protection.

Andrew Huang, Senior Investment Manager State Super NSW said: “We have worked closely with Omega to better meet the needs of our fund, which has a large base of members approaching retirement age. This is somewhat unusual in our industry and needs a well-crafted solution.

“Omega worked with us to design a well-integrated strategy that combines factor investing and an option overlay in a transparent way,” he said.

Omega portfolio managers John Moore and Andrew Gruskin have come together to deliver a well-researched portfolio.  Portfolio Manager John Moore said key aspects of the approach include:

• 100% stock equity exposure but with a lower Beta via the options overlay strategy.  Capture ratios are asymmetric with a relatively low downside while not compromising the upside.
• A high yield derived from dividend income (including franking credits) and option income. These two sources of yield provides for more stability over time through different market conditions.
• The strategy doesn’t rely on rotation of the portfolio for dividend run-up purposes in order to increase its income yield, and there is far fewer concentration risks present in the underlying portfolio.

Mr Gruskin, an Omega founder said: “This is further vindication for Omega with respect to our motto: begin with the end in mind.  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 of investors.”

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