Page 24 - Print21 Magazine May-June 2022

Superannuation
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support the print industry, and in the changeover virtually all the main levels of support, including those mentioned, have been retained.
Arter says, “This group called the joint advisory committee will engage deeply with the fund about how we sustain it, quite apart from the brand name, and how we sustain the existing membership, how we serve and how we continue to attract and retain members, because each industry fund, no matter how small, does have its own unique attributes in that respect.”
Cbus is one of the longest- established super funds, it has had an accumulation fund before Bob Hawke and Paul Keating made super compulsory. Arter says, “That's important because it means we've had a lot in practice at the game. We have a strong record of performance returns since inception.”
The benefits
So what are the benefits for Media Super members who now find themselves in Cbus? Well, effectively, it comes down to size. The big
funds like Cbus are able to run with lower costs to members because of their size, and they are able to have in-house investment teams, again because of their size. Around 40 per cent of the Cbus fund is managed inhouse, with 120 investment professionals looking after it.
Arter says, “We’ve been able to save members $410m over the past three years thanks to inhousing.” And as an industry fund all that money, and all its returns, goes to members, none is stripped out in profits to shareholders.
Smaller funds like Media Super face issues of sustainability, and that is a key requirement of the regulator APRA. With fewer people coming into the print and media industries there was a danger in
the future of shrinking to what could be an unsustainably low level, unsustainable meaning fees would keep rising past acceptable levels to make up for the declining numbers of new members. That simply will not happen with Cbus, it is too large, so the fee structure will not get to the point where it is eating into members returns.
Arter says, “A difference between a very large fund like ours and a smaller one is we have the resources, so for instance if APRA says we need such and such compliance and we have to take on two extra compliance officers to handle that, for Cbus an extra two
24 Print21 MAY/JUNE 2022
We have the resources: Justin Arter, CEO, Cbus
what you'll get really out of any of the large industry funds. To be blunt, we're not generic, but you'll get that out of pretty much any of the larger industry funds who are large and sustainable.
“If you are with a larger fund you have the ability to tap into certain investment strategies that are simply not offered to you if you're a member of a small fund, because frankly, you're too small to participate. This could be specialised infrastructure, or specialised property where we have our own property development, where you just don't get a look in if you're in a smaller fund. The returns tend to be lower and they tend to be more volatile because you're not on the kind of platform that’s worth it.”
Virtue of size
Emphasising the point he says, “Let me assure you, from having worked in the commercial sector, a big customer if I could be blunt enough to call it that, any large fund, is typically buying fund management services
at a third of what a small fund is buying, and in some instances a tenth of what the small fund is buying. It's just the virtue of size, if a large fund bowls up with up with mandate for $1bn as opposed to $70m from a smaller fund you can get your own mandate. You don't have to be in a pooled source, and there are all sorts of other technical and structural,
and legal advantages. It's virtually impossible to compete with that size.”
The investment approach at Cbus is to take the long term horizon.
It does not seek to chase the short term gain, preferring instead rolling sustainably good risk adjusted returns. It was one of the very few funds to actually record a positive gain, albeit a minor one, in 2020, the first year of Covid.
There will be other groups who take a riskier approach and who in a supersonic year may achieve higher returns, but you can be virtually assured that in the more troubled years they will be well behind.
With a lifetime in financial services, working for the likes of Goldman Sachs and JB Were, and now 18 months into his tenure at Cbus, Arter certainly
has a clear idea of how the fund can maximise the return while minimising the fees, and the risks. Like many industries, super is in a state of flux, and super funds have their critics, mainly from those idealogically opposed to member-run funds, but
for members of Media Super who now find themselves in Cbus, it seems the future is in good hands. 21
staffers on the 600 we have is not
as big a cost as the two on the 35 or 40 that funds like Media Super had. Financial services is all about scale, and it's all about buying power. It's not a coincidence that the four large banks have by far the lowest cost of capital, and therefore the greatest ability to accrue profit, and therefore benefits to their shareholders, than any other small credit union.”
Despite the vast amounts of assets held by the vast number of funds Arter says only the biggest are cash flow positive, he says, “The sad fact is if you had a gigantic Excel spreadsheet with scores and scores of names, probably 80 names on there, only about six or eight of them are actually in flow, with Cbus one of those.
“It takes some courage for a board of trustees to actually recognise that for the future one might be better off in the hands of someone else. I actually salute them for doing it.” – Justin Arter, CEO, Cbus
“The benefits of scale and the benefits of sustainability mean we are
a fund which is in in flow. And that means obviously we had more members joining than retiring or changing funds. That's a good place to be.”
Arter believes that the economies of scale from the very large funds liked Cbus are vital to the future of super funds, as they try and deliver consistently good returns for low fees, as they provide opportunities that smaller funds simply cannot access.
He says, “We're buying first and foremost. We're buying or creating investment management services, because if you're a member of Cbus, you want good investment returns, and you want them at a good price. It's a pretty straightforward proposition really. But when you're fundamentally buying, you're wanting to buy at a decent price. Otherwise, you'll take off and go someplace else that will actually achieve that ambition for you. That's