Public Trustee commenced its investment relationship with TCorp in July 2001. This occurred following changes to trustee investment powers and the move away from authorised investments to being able to invest more widely, with greater risk. As a risk management strategy the Public Trustee elected to outsource aspects of funds management: avoiding the traps of establishing and maintaining a highly specialised funds management function. Our reputation as a trustee was at risk if we did not manage this change well.
We had a long history of managing a cash and fixed investment portfolio with above market returns. Our new obligations were not so simple and they were not our core business.
TCorp provided a solution in a number of ways:
- A separate mandate for cash/fixed interest.
- Access to an Hour-Glass facility for our clients who needed access to growth portfolios (Australian and International Shares).
- Converting their facilities to trust structures to meet our retail clients needs.
It is a business relationship with clear accountabilities.
We retain control of how we invest and do not get distracted on the nuts and bolts of actual funds management. We still have to manage our funds from both the bottom up and top down: making sure our investment funds meet the clients’ needs and making sure our client’s investment need are properly assessed. We set the strategy and monitor compliance. We are assisted by routine reporting and recommendations from TCorp.
Meeting the investment responsibility for $1.3bn of client funds is made much more risk effective by this relationship – we get TCorp to do what they know best and we can carry on doing what we know best: clients’ investment needs.
Peter Whitehead is the New South Wales Public Trustee.