Exclusive interview with Stewart Brentnall, Chief Investment Officer, TCorp
Global Investment Insights
with Stewart Brentnall, Chief Investment Officer, TCorp
Stewart Brentnall joined TCorp as the Chief Investment Officer in 2017, where he leads their investment management business and is responsible for advice and management of A$118 billion of funds across the NSW Government, including pension assets, insurance reserves and a central sovereign fund to invest long term Debt Retirement assets and to recycle infrastructure sales proceeds.
With over 35 years’ investment management industry experience in Australia and the UK, Stewart has held senior roles at ANZ’s Australasian Wealth business, BT Financial Group, QIC, Goldman Sachs, and Schroders, prior to TCorp.
In this exclusive interview with Global Investment Institute, Stewart discusses the macroeconomic trends shaping asset allocation, the impact of TCorp’s OneFund implementation, how the portfolio is being positioned for long-term structural shifts, the evolution of TCorp’s asset mix and shares a personal story offering practical insights for investors.
Q. What are the key macroeconomic themes and risks you are monitoring and how are they shaping your asset allocation decisions in the current environment?
A. We are watching three themes:
Considering elevated geopolitical uncertainty and US policy instability, many portfolios have high levels of US concentration. We may see less capital flow to the US in coming years.
There are large and growing fiscal deficits in many large economies, including the US. The term premium investors demand to invest in long-term government debt in these economies may rise, implying questions about what the path back to fiscal sustainability will look like.
On the contrary, investment opportunities may improve in other economies, for example: in Europe with a large fiscal stimulus or in Japan with a ‘normalising’ macro and inflation / interest rate environment.
Q. Having implemented the OneFund approach by consolidating multiple state investment funds into the one fund, what have been the most transformational facets of this transition to TCorp’s investment outcomes and how has it better equipped TCorp to achieve its long-term investment objectives?
A. The implementation of OneFund has had three main impacts – significantly stronger investment returns, operational efficiencies and streamlined governance.
Merging nine funds together to form a single A$65 billion master fund, run at the clearly agreed NSW Treasurer’s risk appetite, has enabled a more equity and real asset rich strategy to be implemented.
The improved higher investment returns are already evident, and these will deliver an extra A$400 million+ per annum, on a rolling 10-year basis, significantly helping the state’s fiscal outcomes.
A streamlined operating model and clearer governance strongly equip us to drive better investment outcomes on a sustainable basis.
Q. With the investment landscape evolving -particularly around private markets, sustainability, and geopolitical risk- what are some of the most significant structural shifts you are positioning the portfolio for over the next 5 to 10 years?
A. We adopt the philosophy of “prepare not predict”. We have positioned the portfolio strategically, rather than tactically, and try to equip it with an all-weather approach for diverse future possible environments.
We do expect an increasing demand for private market investments (especially infrastructure – around digital and climate transitions), at the same time as believing the world is evolving to a new order of re-onshoring and deglobalisation.
We expect volatility to be a little higher and more frequent than in the past, and inflation to be more episodic, given the changing tariffs imposed by President Trump’s government.
Q. How do you expect your organisation’s overall asset allocation mix to evolve over the coming three years?
A. Firstly, we are moderating our exposures to US assets and the USD, and diversifying our unhedged currency exposures to a more defensive basket by increasing our allocations to the Japanese Yen, Swiss Franc and Euro.
Secondly, while equity risk will still be the principal return driver for us, we will focus heavily on unlisted sectors as well as listed equities.
Finally, we are enhancing the defensive levers in our portfolio by better utilising risk overlays and convexity generating derivative strategies to provide downside protection.
Q. Is there a personal or career specific story you are willing to share with us that has had a significant impact on you, which can serve as practical advice to others?
A. Over my career, I have had the enormous privilege of spending one on one time with some truly great people, including Jack Bogle (founder of Vanguard), Ben Bernanke (former US Federal Reserve Chair) and Julie Bishop (Australia’s former Federal Foreign Secretary), whom I worked for in my early career.
All three of these people have achieved foundational results for their corporate or federal (even global) stakeholders, yet they just described themselves to me as normal people whose job was “to do the right thing, diligently and with courage”.
I have always remembered these words, which have strongly shaped my approach to managing money - to care like an owner for the portfolios which my colleagues and I in fact run as an agent.
Good processes and controls backed by great governance (even at times when this feels very uncomfortable) will always result in the right decisions and actions.
Stewart Brentnall, Chief Investment Officer, TCorp
Stewart joined TCorp in 2017 as the Chief Investment Officer. He leads their investment management business, responsible for advice and management of A$118 billion of funds across the NSW Government, including pension assets, insurance reserves and a central fund to invest long term Debt Retirement assets and to recycle infrastructure sales proceeds.
Stewart strengthened TCorp’s investment management framework by transforming the investment model to a risk-based Total Portfolio Approach.
With over 35 years’ investment management industry experience in Australia and the UK, Stewart has held senior roles at ANZ’s Australasian Wealth business, BT Financial Group, Queensland Investment Corporation, Goldman Sachs, and Schroders, prior to his 8 years at TCorp.
Stewart holds a BSc Economics (Honours) from Bristol University, UK. He is a Chartered Accountant, a Graduate of the Australian Institute of Company Directors and Fellow of FINSIA.
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