Episode 61: AustralianSuper’s Alistair Barker

DAA, Your Future, Your Super and Disruption

Alistair Barker is the Head of Total Portfolio Management, Investments for AustralianSuper, one of the largest pension funds in the country at $200 billion. In this episode, we spoke about dynamic asset allocation, the impact of the Your Future, Your Super reforms on active management and technological disruption. Please enjoy the show.

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1:00 Starting out as a intern without pay
3:00 Working at Hastings and learnings from the early days
4:30 In funds management it is not about the quantity of decisions; it is about the quality of decision making
5:00 Investing with Raphael Arndt in a series of gas pipeline assets
6:25 “If you are not paying for things that might potentially provide future upside, then those are usually the best deals.”
7:30 Starting at AustralianSuper in a hybrid role of private market investments and portfolio strategy
10:00 “Early on in my career, AustralianSuper decided to bulk up with internal investment teams”
13:00 Does internalisation of asset management change the culture or create a clash of cultures?
16:00 “A number agency issues disappear with internal management.”
17:00 “My title change reflected more that there was now a term in the industry that reflected what I’ve been doing for a number of years [rather than a new focus on total portfolio management].”
19:00 “The challenge of a multi-strategy setup is that too often you have great ideas that just don’t have any impact on the total portfolio.”
21:00 A risk budget implies a number that needs to be spent. For us it is more about a range of risk taking depending on where we are in the cycle.
25:00 DAA is important at all times, not just in periods of distress such as a pandemic, because you never know when it is going to pay off.
30:30 The role of bonds is to diversify from equities. So what sort of risks are we worried about that we need to diversify against?
33:00 Losing your control over the portfolios liquidity leads you to a path-dependent outcome where you might be a forced seller of a particular asset class
34:00 Our portfolio liquidity is set at a level that we can buy the most attractive assets at the bottom of the market.
34:30 Liquidity is the key enabler by which to affect the asset allocation and you don’t want to lose control of that
36:00 We had a university student do a thesis on member switching and they found that over 60 per cent of switching detracted value
37:00 We want every member to be engaged with their super, but not so engaged that they log on every day to see what their unit price is doing
38:40 If you are not selling your equity portfolio tomorrow, then why are you worried about what it is worth today? Intrinsic value manifests over time.
40:00 Your Future, Your Super reforms: are you concerned about how it affects your ability to invest in active management?
41:30 I testified in front of the productivity committee and said that benchmarking helps
43:30 What benchmarking has taught us is that you get rid of active management that is redundant. Not necessarily, poor active managers, but those who are diversified away at a total portfolio level.
46:00 Working at Stanford with Ashby Monk on technological disruption
47:00 Technological disruption is not new, but it is often not captured by risk models
48:00 Often people think that to protect against technological disruption you just buy a bunch of venture funds. Well, venture is never going to be big enough to make a difference.
50:30 If you see what you have to pay for renewable energy assets today, it not only prices in carbon risk, but it also presumes there won’t be any new technology.
51:00 Are there similarities between the early days of the internet and what is happening now in crypto?
53:00 Getting involved in venture capital
54:30 Using big data to make Indian corner shops more profitable


The [i3] Podcast is the official podcast of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.