HSBC Global Asset Management will manage a A$500 million (US$337.2 million) global multi-factor equity mandate for Australian superannuation fund First State Super, and provide research and portfolio management support to the fund’s internal investment team.
The company describes this as “unique” arrangement compared to a traditional partnership between a fund manager and asset owner because of what it says is “a clear separation” between the investment mandate and the research and development (R&D) support.
“Whilst run in parallel, each service will maintain independence to enable First State Super’s internal team to receive R&D support in building their own capability in addition to HSBC Global Asset Management meeting the stated mandate objectives,” the asset manager says in a statement on October 9.
“We believe that arrangements of this type will become a global template for future similar partnerships,” Geoffrey Pidgeon, head of HSBC Global Asset Management, Australia, says in the statement.
Ross Barry, First State Super’s head of systematic and impact investing, adds that the fund is “focused on building out this platform to manage part of our international shares” after having successfully developed internal investment capability in Australian stocks.
According to an investment consultant in Hong Kong, it’s a “pretty new idea” from an asset manager’s perspective to bundle investment and R&D services, although some investment consultants do provide all-round packages to asset owners.
“[HSBC] may have the first mover advantage, but it’s not difficult for its rivals to copy the model if it is proved to be successful,” he tells Asia Asset Management, speaking on condition of anonymity.
First State Super currently manages US$67.5 billion for 760,000 superannuation members, and allocates as much as 40% to international stocks in the portfolios for some of its strategies.
HSBC Global Asset Management, headquartered in London, had $500 billion of total assets as at March 31, 2019.