Cbus team turnover, CFMEU link prompts critical assessment

Big construction industry superannuation fund, Cbus has received a critical assessment from research and ratings house Morningstar based on the fund’s continued turnover and change within its investment team.

While Morningstar said that, overall, Cbus remains an investible all-in-one superannuation option, it needed increased stability in senior investment team.

It said that turnover across Cbus’ senior ranks remains an issue and pointed to the influence of the Construction, Forestry and Maritime Employees Union (CFMEU) as an issue.

“While turnover has not been high across the broader investment team and replacements have mostly been made, it’s hard to view Cbus positively for its culture or ability to retain key talent as things stand,” Morningstar said.

“Senior team turnover also comes at a time when Cbus’ board has been caught by its limited independence and strong union affiliations, with three members being forced off the board in August 2024 following corruption allegations in relation to the Construction, Forestry, and Maritime Employees Union.”

“Cbus is not unique with its union representation; however, with the current and former chairs of the board also connected to the Australian Labor Party, increased independence would be welcomed,” the ratings house said.

“These concerns also extend to the appropriateness of union affiliates sitting on Cbus’ investment committee, which has important oversight around Cbus’ asset allocation and material private market transactions.

“This outweighs positive steps that Cbus has made to translate its growing scale into lower investment fees in recent years and also the launch of a new insurance offering for members in dangerous occupations, which should support member growth.”

Outlining its concerns around Cbus senior investment team stability, the Morningstar analysis pointed to CBUS having appointed Kristian Fok to CEO following Justin Arter’s retirement in May 2023.

“In turn, Brett Chatfield was promoted to CIO from deputy CIO in June 2023. The two have been significant in shepherding CBUS’ investment team since joining in 2012/2013. The sharp departures of deputy CIO Alexandra Campbell and head of total portfolio management Mark Ferguson in May 2024 raised concerns about the dynamics,” it said.

“Campbell led infrastructure since joining in September 2020 and subsequently private markets; she was promoted to deputy CIO in July 2023. Similarly, Ferguson led total portfolio management from July 2021. These departures were followed by CBUS’ chief strategy officer Alexandra West’s exit in July 2024.

“The firm has been able to find senior reinforcements through Leigh Gavin (head of portfolio strategies) and Justin Pascoe (head of portfolio construction), while Jordan Kraiten was hired from Hostplus to be head of private markets and infrastructure.”

Reacting to the Morningstar report, a Cbus spokesman issued the following statement:

“There has been very low turnover in the Fund’s investment team and Morningstar’s rating of Cbus remains unchanged from the previous year.

Cbus has added a number of highly experienced senior resources over the last year including Leigh Gavin (formerly of AustralianSuper, and prior to that the CIO of LUCRF Super) and Justin Pascoe (formerly of AustralianSuper, and prior to that the CIO of VFMC).

Cbus’ investment team, led by CIO Brett Chatfield who has been with the fund since 2013, consists of around 100 highly experienced investment professionals.

The average industry experience across the senior members of the investments team is 24 years and the average tenure at Cbus is five years.

Over the period to 30 June 2024, Cbus’ default Growth option was ranked in the top 5 best performing funds in the industry survey over the 10, 15, and 20 year time periods.

Cbus has had union representation on its Board for 40 years, and like other industry funds, has benefited greatly from the equal representation model – there has been no change to that structure since Morningstar’s previous reviews.

Cbus notes it is highly rated by other research houses, and the Fund looks forward to continuing to work with Morningstar on its ongoing reviews.”