Australian Retirement Trust picks investment administrator
Australian Retirement Trust (ART), one of Australia’s largest superannuation funds, has chosen State Street Corporation as its preferred and primary custodian and investment administrator after a tender process.
The contract took effect on December 21 2022.
ART was formed through the merger of Sunsuper and QSuper on 28 February 2022 and manages more than A$230 billion ($160 billion) in retirement savings.
The State Street mandate will cover all the retirement savings ART manages.
ART’s Chief Financial Officer Anthony Rose said State Street’s appointment as the fund’s primary custodian was an example of how the merger was driving greater efficiencies for the more than two million ART members.
“Moving to a single custodian will be a significant integration milestone following the merger last year,” he said in a release. Both heritage funds have worked with State Street over the past decade, he added.
ART did not respond to an AsianInvestor request for more information on the mandate.
AsianInvestor understands that in terms of investment administration, the mandate will cover custody, accounting, performance and analytics, tax and regulatory reporting and loan servicing.
DATA IS KING
In addition to scalable middle and back-office solutions, State Street will provide ART data management and analytics across public and private market assets.
The technology is expected to help ART collect, curate and validate data to make better-informed decisions, State Street said in a release.
Institutional investors are increasingly challenged by the depth and breadth of data available to them and the pressure to embrace technology and become more efficient is high.
In Australia, there has been a slew of consolidation in the supernannuation space in the past two years, triggered by the declining performance of funds and pressure on costs caused by Covid-19.
In addition, the Australian Prudential Regulation Authority introduced performance tests and fund comparison tools that has brought even more performance pressure to bear on retirement funds.
Asset owners generally deal with a wide range of assets, ranging from highly liquid to highly illiquid, along with associated data requirements. Not only does data on these assets involve different time horizons, but the need for quality and timeliness of information varies depending on short-term and long-term needs.
Funds that employ external asset managers also typically see a lag between accounting and custody data ranging from two to five days, State Street said in a July 2022 post on its website.
“This is no longer acceptable from either a regulatory or stakeholder perspective. Indexation, or using a proxy to gauge expected exposure, is one approach used to compensate for the time lag, but it’s a blunt instrument that can leave asset owners with unwanted exposures, especially in volatile markets,” it noted.
APRA has also said that completing key reforms to strengthen the financial and operational resilience of APRA-regulated entities, and improving outcomes for superannuation members is one of the key policy and supervision priorities for 2023.