Australia’s State Super will outsource its investment team—and the portfolio —to consultant Frontier Advisors and, as part of the deal, the government superannuation fund will take a 23% stake in the industry super fund-backed asset consultant.
The two organizations described the arrangement as an “independent chief investment officer” or ICIO service, which is expected to launch before the end of 2025.
The entire investment team from State Super, which is led by CIO Charles Wu, will exit State Super and move inside Frontier. A total of 14 staff members will move from State Super to join Frontier’s Sydney-based team, bringing the headcount there to more than 100.
“No staff from either firm will be displaced by the venture, and it is expected that take-up of the ICIO service will ultimately see Frontier continue to expand its team to accommodate the forecast growth,” Frontier’s leadership stated.
Frontier added it will “support investors with their portfolio management, operational, risk management, administration, custody and reporting requirements, while retaining its unconflicted adviser status.”
State Super has been a client of Frontier Advisors since 2006. The firm’s other industry superannuation fund owners are AustralianSuper, HESTA, First Super and Cbus.
State Super, the superannuation fund for New South Wales government staff, closed to new members in 1992 and faces limited growth prospects. It currently has more than 80,000 members and manages A$38 billion ($24.89 billion) of retirement savings.
The deal has been in the works for the last 18 months.
“The boards of both State Super and Frontier, have been diligent in exploring the analysis, market testing and recommendations put to us by management and independent external advisers,” Frontier chair Angela Emslie said in a statement. “Although we have been patient and curious in that process, it was apparent early on that this was a unique and positive opportunity for all stakeholders.”
The move “will be a seamless transition as both the current adviser and investors will remain operating exactly as they have for over a decade,” said State Super CEO John Livanas in a statement. “We can secure this proven capability for State Super and our members into the future. For the team itself, this move opens up professional opportunities, in both the near and longer term, as they move into a much larger investment organization with a strong growth trajectory.”
A version of this article originally appeared in our sister publication, Financial Standard, which, like CIO, is owned by ISS STOXX.
Tags: OCIO, outsourcing, State Super, Superannuation