The outperformance of industry superannuation funds may not necessarily continue, according to Warrant Chant of Chant West Financial Services, who says their outperformance compared to corporate master trusts is gradually being eroded.
“Over the last three years the difference in performance has not been that great,” Chant said. Corporate master trusts are also gradually changing their strategic asset allocations, which is boosting their performance. According to Chant West’s latest multi-manager survey the median growth fund performance for master trusts over the last financial year was 14.6 per cent compared to 14.5 per cent for industry funds. Over the last three years industry funds median performance was 13.9 per cent compared to 13.7 per cent by master trusts. The survey now includes most major industry funds excluding clients of Access Economics – Westscheme, MTAA and Statewide – which have a relatively high allocation to alternative assets. “There’s no question industry funds have outperformed by being underweight international but that’s not going to give a sustainable advantage,” Chant said. Industry funds also have a larger allocation to alternative assets compared to master trusts – 11 per cent versus 4 per cent –, which is still a positive, according to Chant, but they may have to change their attitude to liquidity. “The master trust are more concerned about liquidity because they’re operating in a non-super environment. Industry funds have to become more interested in liquidity because of Choice of fund,” he said.
The brunt of losses from the LA wildfires are expected to be borne by primary insurers and high-risk reinsurance programs, but super funds are nevertheless closely monitoring the possible impact of the fires on catastrophe bond and insurance-linked securities exposures.
Simon HoyleJanuary 17, 2025
