Our approach to investment

VFMC’s primary objective is to manage the long term investment assets of Victorian State Government entities. We aim to deliver market leading long-term returns for our clients.

We measure our returns on the following:

  • Effective – delivering against clients’ long term risk and return objectives
  • Efficient – providing value to clients with cost to serve less than they can individually achieve through similar providers globally, and
  • Competitive – delivering exceptional client experience and attracting top global talent

To help deliver on our commitment, VFMC has a clear investment philosophy and approach.

Investment Philosophy

VFMC is focused on understanding and delivering to its clients’ investment objectives.

 

 

Investment objectives

When partnering with us to manage their investments, clients first set their objectives.

VFMC then works with its clients to design portfolios that have the asset mix that best meets the investment objective, risk tolerance and other relevant constraints.

While each client is unique, portfolios are generally designed to deliver absolute returns in the order of 2-5.5% in excess of inflation per annum over rolling 3 to 10 year periods, depending on client risk profile.

Strategy

Our portfolio construction draws on the strategy and asset allocation skills of the VFMC investment teams.

The Strategy Team considers asset allocation strategies relative to clients’ long term Strategic Asset Allocation, as well as providing research and insight into the overall asset allocation mix.

Together, this determines our portfolio’s weightings to each asset class.

Portfolio construction

We build portfolios to achieve our clients’ objectives using the benefits of scale. This lets us access opportunities and investment management expertise that may not otherwise be available to clients at competitive costs.

To do this, we use a combination of in-house investment management and external fund managers.

Our internal management is practiced where we have the capabilities to generate superior risk-adjusted performance net of fees.

Approximately one third of VFMC’s funds are managed internally.

Asset classes

VFMC invests in a range of asset classes:

  • Australian Equities
  • International Equities
  • Infrastructure
  • Property
  • Inflation Linked Bonds
  • Diversified Fixed Interest
  • Non Traditional Strategies (Hedge Funds, Private Credit, Insurance  and others)
  • Cash

Each asset class has a team that is responsible for undertaking detailed research and due diligence on investment opportunities.

This includes examining investment managers, within their asset class and ensuring that VFMC’s exposure is within prescribed guidelines.

VFMC news

Supporting best practice in investment risk management

VFMC recently completed its Investment Risk Uplift Project to further elevate portfolio risk capabilities...

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VFMC Welcomes New Additions to Leadership Team

VFMC welcomes the appointment of new Chief Operating Officer, Lucy Carr, and Chief Finance...

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Vale Jack Diamond

VFMC is saddened by the recent passing of financial innovator and respected former VFMC...

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VFMC welcomes former CEO Lisa Gray to the Board

The Victorian Funds Management Corporation (VFMC) has announced the appointment of former Chief Executive Officer, Ms Lisa Gray to the Board of VFMC effective 1 January 2022.  In her...

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