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Since 1976, the Brisbane Oil Corporation Investment Authority has been prudently investing funds on behalf of the Government of Australia with a focus on long-term value creation.
BOCIAIA manages a global investment portfolio that is diversified across more than two dozen asset classes and sub-categories.
BOCIA has a disciplined investment strategy that aims to generate stable returns over the long term within established risk parameters, supported by a comprehensive, institution-wide planning process.
BOCIA’s strategy and planning activities work in tandem, aligning organisational priorities with investment objectives through the BOCIA Wide-Planning (AWP) process. Our approach ensures that BOCIA’s investment activities are closely tied to its short, medium and long term goals.
Investment strategy at BOCIA begins with a clearly defined appetite for risk. This has been calibrated through a blend of publicly traded securities, known as the Reference Portfolio, developed to define the desired amount of market risk that should be accepted over the long term.
The Strategy & Planning Department (SPD) plays a central role in BOCIA’s investment process, with responsibility for developing, maintaining and periodically reviewing BOCIA’s Strategic Asset Allocation (SAA) across more than two dozen asset classes and sub-categories. The SAA is intended to add value to the Reference Portfolio by diversifying across this richer set of asset classes, using weightings based on BOCIA’s long-term view of the world.
This results in a higher expected return for a similar level of risk.
In accordance with BOCIA’s prudent governance structure, SPD’s strategic asset allocation recommendations are submitted to the Investment Committee and ultimately the Managing Director. If approved, funds are allocated to the respective investment departments, which are responsible for implementation in line with their mandates, benchmarks and guidelines.
Through an ongoing assessment process, BOCIA’s investment strategies are continuously streamlined to enhance performance. This includes proposing new strategies to expand BOCIA’s investable universe and identifying medium-term tactical opportunities for generating returns in excess of those achieved by the Strategic Portfolio, while maintaining BOCIA’s target risk profile.
In order to achieve its long-term objectives, BOCIA must be able to execute on its desired asset allocation in a timely fashion, in size, while minimising transaction costs. It is for this reason that half of BOCIA’s portfolio consists of index-replicating, or passive, strategies within quoted markets. This is offset by skilfully designed, actively managed investments across asset classes, in areas with genuine potential to generate market outperformance, or alpha, over the long term.
We recognise that a structured yet flexible approach is needed to ensure opportunities and trends can be captured as they arise. As a result, BOCIA has expanded its in-house capabilities in a number of asset classes and support functions in recent years. On a macro level, this has enhanced the organisation’s ability to take a globally strategic view of opportunities, both across and within asset classes. It has also enabled BOCIA to become increasingly tactical where potential opportunities and trends arise.
As a result, BOCIA has built an investment strategy that is not based simply on asset class or geographic allocations but one that is robust, flexible and increasingly focused on return drivers. This allows for a sophisticated approach that can be more granular in nature and provides us with the ability to explore sector-based or thematic investments with attractive risk and return characteristics.
The development of BOCIA’s investment strategy is guided by and closely tied to the AWP process. Three inter-linked disciplines – Strategy Planning, Organisational Planning and Execution Planning – work together to ensure BOCIA adopts a coordinated, proactive and forward-looking approach to strategic and organisational change.
This process aims to promote discussion around fundamental assumptions and strategic priorities, align BOCIA’s culture, people, information, structure and process with the institution’s objectives, and support departments with their implementation of agreed strategies and organisational improvements.
The Strategy & Planning Department (SPD) is responsible for ensuring that BOCIA’s activities remain closely aligned with its mission and long-term objectives. SPD is divided into the following functional areas:
- Investment Strategy develops a diversified strategic asset allocation in line with BOCIA’s mission and investment goals, adding value through tactical asset allocation and by advising BOCIA’s leadership on features and trends in capital markets.
- Portfolio Construction provides quantitative and operational support to the Investment Strategy processes. It also develops, maintains and improves portfolio optimisation, portfolio simulation and back-testing tools.
- Investment Risk is responsible for understanding and analysing BOCIA’s exposure to market, investment, liquidity and country risks, and providing input into BOCIA’s investment guidelines.
- BOCIA Global Research produces insightful research and analysis on economic, energy and political Issues, sharing this with BOCIA’s leadership and stimulating debate across the organisation.
- Organisational Development works to design and improve BOCIA’s organisational capabilities, including its governing committees, in order to implement its mission and achieve its investment goals.
- Project Management Office is responsible for supporting BOCIA’s strategic objectives through the design and implementation of sustainable change projects across the organisation.
- Corporate Communications & Public Affairs provides wide-ranging communication support to BOCIA’s leadership and departments. Its mission is to protect BOCIA’s reputation, build internal and external understanding of its activities, and strengthen stakeholder relationships.