2018 NextGen

“Kristian commenced with Cbus in 2012 and has been instrumental in building the skills and resources within the Investment team; especially as Cbus has grown from an $18 billion fund to $43 billion today.

Kristian was central in designing and implementing the new investment strategy for Cbus that was launched in 2016 and addresses the future challenges of investing a growing pool of assets and capturing the advantages of scale for members. He has skillfully managed a growing team of direct reports and achieved strong performance outcomes and cost savings for the Fund and its members.”

—David Atkin, Cbus CEO

Skill and diversity are key to driving returns, believes Kristian Fok, CIO of Cbus Superannuation Fund. Since his fund has more than doubled its size to $43 billion, he has been busy building the diverse in-house investment team (that has 40% women and 50% overseas experience) while navigating the complexities of rapid growth. As he works on expanding assets, capturing advantages of scale, and designing and setting the investment strategy for the fund, Fok’s goal is to constantly enable his staff to make solid decisions. This year, Fok’s projects continue to be multifaceted: He plans to fine tune quantitative strategies, fundamental Australian equities (large and small caps), fixed income, and liquid risk premia investments, as well as promote a vigorous alignment with the United Nations’ Sustainable Development Goals.

Fok is a fellow of the Institute of Actuaries and began his career as deputy director of consulting for Frontier Advisors, before starting at Cbus as executive manager of investment strategy in 2012. 

CIO: What are the accomplishments you are most happy to have achieved recently, and why?

Fok: We have undertaken an ambitious uplift in our investment team capability over the past two years which involves insourcing direct investment responsibilities for a portion our portfolio. This has resulted in a significant growth in our team and the need to deal with greater operational complexity. My strong belief is that building a skilled and diverse team that is culturally aligned towards driving results for our members will deliver the investment outcomes required by members to achieve a comfortable retirement.

To date, we have built a diverse team across a range of metrics, including gender (more than 40% of the team are women), international experience (more than 50% of the team have worked overseas), and other broader experience.  A number of new direct investment strategies are successfully up and running, including fundamental global equities, direct lending, and direct infrastructure.

CIO: What would you be most excited to accomplish in the year ahead, and why?

Fok: Next year will be a time of consolidation and delivering on the large commitment that was made to develop our new capabilities. We expect that total investment costs will fall between 7 and 10 basis points next year as we continue to allocate more to our internal strategies. We anticipate adding new initiatives including quantitative strategies, fundamental Australian equities (large and small caps), fixed income, and liquid risk premia investments.

Additionally, we will continue to integrate our responsible investment approach more deeply in our investment decision framework and work on how the we may align our investment approach to the United Nations’ Sustainable Development Goals.

CIO: What’s the most rewarding aspect of being an asset owner?

Fok: At Cbus, we only need to focus on our members. It is very satisfying to know that our efforts directly improve the lives of working Australians. We do not need to produce a profit for shareholders, nor are we distracted by fundraising requirements that others in our industry have. We are also advantaged by having both reasonable scale and strong positive cashflows, which allows us to make value-enhancing decisions over longer time horizons. Lastly, we have a strong direct investment program that includes property development and infrastructure. It is very satisfying to see that our investments not only improved our members’ retirement balances, but they also improve the society that our members will live in.

CIO: What’s the most challenging?

Fok: Investing large amounts of members’ money is complex, however I am frustrated to see the number of intermediaries and businesses that have been set up on the back of the retirement savings industry that substantially profit by taking a cut out of returns along the way. Ultimately this a cost born by our members which erodes their retirement savings and often drives short-term investment behaviours.

CIO: What are you most hopeful about in the future of the industry?

Fok: I think there is a growing realisation amongst asset owners that they have not only the ability, but the responsibility to help shape a more inclusive and sustainably society for the future. Through our ownership and engagement, we can create an environment that is more conducive for company boards and management to make decisions that positively impact value over a multi-year time horizon, rather than being focused on quarter-by-quarter results. We also have the capital that can support investments in new technologies and infrastructure that will be required to address some of society’s biggest challenges, such as climate change and our ageing population.

CIO: What are you most cautious about?

Fok: I’m very conscious that we need to get the right cultural alignment in our growing team. Over the past couple of years, we’ve put a lot of effort into this aspect of our recruitment and people development. I am also mindful that we are likely to be facing a more difficult investment environment in the future. A high-performing, diverse team which is working for common purpose will be needed to help us navigate this successfully.

CIO: As a leader, what are the most important aspects of the industry you hope to change over your career?

Fok: I believe there are too many people in the investment value chain who are getting wealthy from people’s savings. That’s not to say that investing is easy or that an asset owner can do everything, but we need to drive a better outcome for our members and stop paying for participants in our industry that add little value.

CIO: If you had one piece of advice for your peers, what would it be?

Fok: Take the time to invest in the development of your people. Give them the right training and support to build their teams, provide them with proper delegations and responsibility to act on ideas, and make sure they have a common vision of what success looks like. Do this, and you will be pleasantly surprised at what an investment team inside an asset owner organisation is capable of achieving.

CIO: What are the biggest current trends you are seeing that have surprised you?

Fok: There is a growing trend of asset owners embracing their stewardship responsibilities and attempting to increase the time horizons of their investment decisions. This is positive, as it flows in the opposite direction of short termism with a focus mainly on individual outcomes that has dominated the finance industry for a long time.