Former Future Fund CIO on sources of TPA outperformance

Investment Magazine

One of the most experienced practitioners of the total portfolio approach (TPA), Sue Brake, says its edge over the strategic asset allocation (SAA) comes from being long-term, being nimble and being innovative in portfolio construction. As the former chief investment officer of Future Fund and now an independent investment consultant, as well as sitting on the high-profile five-member investment and risk advisory panel for the Monetary Authority of Singapore, Brake says she was not surprised at the finding in the recent Thinking Ahead Institute (TAI) research – that among 26 asset owners surveyed, the organisations with TPA have outperformed those with SAA by 1.8 per cent per annum in the past decade. In fact, she tips that the value-add of TPA could be even higher. 

“I’ve done some work for a client where I showed then it was 2.4 [per cent per annum], so I very much believe those [outperformance] number,” she tells Investment Magazine. The industry is moving away from an SAA mindset where “some ivory tower boffins have decided what the portfolio looks like” and individuals can only make the best of the piece of portfolio they got, she says. “It’s a very elbow-out, hungry, innovative and efficient [kind of culture in SAA] – efficient if you’re trying to optimise the value of that small component.  

The rest of this article can be found at investmentmagazine.com.au.