ipac has a track record of uncovering innovative funds management approaches through its extensive research. Recent examples include:

• First in Australia to make US boutique fund managers, LSV and GMO (Growth), available to retail investors.
• First in the world to appoint US quantitative manager, Arrowstreet Capital, to an international small capitalisation mandate.
• First in the world to appoint CB Richard Ellis Global Real Estate Securities to an international property mandate.
• First in Australia to appoint PIMCO to an alternative income mandate using its short-term strategy.
• One of the first to appoint quantitative manager, MIR, to an Australian shares mandate.

ipac selects best of breed managers that have a competitive edge. The 6-step selection process is:


step 1: initial screening

step 2: desktop review

step 3: in-depth analysis

step 4: due diligence

step 5: recommendation

step 6: approval

step 1 - initial screening: ipac draws on extensive quantitative and qualitative research to produce a list of fund managers for further consideration.


step 2 - desktop review: after a detailed desktop review of the managers’ investment documentation, responses to ipac’s questionnaires, performance data and third party independent research, ipac prepares a short list of fund managers for more detailed analysis, involving on-site reviews.


step 3 - indepth analysis: ipac’s indepth analysis is done through face-to-face interviews and manager visits. The research leads to judgements about the quality of the organisation and their fit for a role in the portfolio. The characteristics outlined below are the basis for all manager assessments at ipac and seek to identify a competitive edge:

people		investment process		business
discipline depth experience incentives integrity leadership synergy talent		coherence consistent application effective implementation evolution repeatable risk & market aware theoretical soundness technical appeal transparency		commitment constraints focus size reputation stability strength
support		performance		portfolio structure
efficiency of back office adequate client service & communications appropriate systems & technology		competitive consistent with approach enduring risk adjusted		consistent with approach defensible impact on total portfolio risk controls

step 4 - due diligence: ipac undertakes a formal due diligence review and completes a due diligence checklist on all managers likely to be appointed. The due diligence process is designed to ensure that all legal, regulatory, administrative and other business-related issues and requirements are resolved before a recommendation is made.


step 5 - recommendation: ranking of alternatives and recommendation of a preferred fund manager.


step 6 - approval: ipac’s Investment Committee approves the appointment of all fund managers. The Investment Committee includes senior executives with extensive investment experience.

manager selection in action

Here are examples of recent decisions ipac has made to its manager line-up in its core Australian portfolios. These changes have added to the return potential and enhanced diversification.

date	sector	change	benefit
May 05	Australian Equities	Appointed MIR Investment Management.	ipac was an earlier adopter of this manager, that was named Money Management Fund Manager of the Year in 2006. MIR has added another source of return to the Australian shares sector strategy.
Sept 05	Australian Equities	Appointed Challenger.	Appointment of this fund manager with its unique benchmark unaware investment process has paid off handsomely for the portfolio.
Jan 06	Alternative Income	Appointed PIMCO to manage this new asset class.	ipac introduced this asset class to guard against rate rises for the fixed interest component of the portfolio. This move proved timely as rates have risen significantly in 2006.
Jan 06	International Property Securities	Appointed CB Richard Ellis Global Real Estate Securities and LaSalle Investment Management to manage exposure to this asset class on a 50/50 basis.	Established a discrete asset class and appointed two specialist managers that helped performance and diversification.
Apr 06	International Smaller Companies	Arrowstreet Capital replaced Capital International as International Smaller Companies manager.	Review of the sector led to a preference for a manager with an innovative quantitative approach and low funds under management.
July 06	International Smaller Companies	Appointed Arrowstreet to manage this new asset class.	The appointment was made following a review of the asset allocation strategy. Preference was to have a manager with an innovative quantitative approach and low funds under management.
Dec 07	Australian shares	Appointed Integrity Investment Management to replace UBS Asset Management	The previous manager at UBS, Paul Fiani, established Integrity Investment Management and was joined by the other senior members from the team. Integrity is a core, fundamental valuation driven manager with a Discounted Cash Flow based approach to valuation. Integrity apply a similar investment process to the one they implemented at UBS.