The funds management industry is very good at analysing itself and trying to predict the future, not just of markets but also of the shape and constituency of the industry. That is not to say that its analyses and predictions turn out to be correct all that often. Opinions tend to gather around the consensus and it is, usually, only the outliers which end up shooting the lights out in a business sense. Given the state of the world, as you can imagine, the soothsayers are working overtime.
Against this backdrop, this year’s Australian Super Investment Conference, being held on the Gold Coast September 16-18, is looking at all aspects of the investment world post GFC . The first of 13 plenary sessions sets the tone. Garry Weaven, chair of Industry Funds Management, will outline what we have not learned from the GFC. He says the GFC has tended to reinforce a few fundamentals rather than teach us some lessons. For example, it is clear that doubledigit returns are unsustainable and, therefore, when returns don’t moderate, they will crash.
Weaven also believes that the GFC has shown that excessive financial intermediation has masked real value and created dangerous conflicts. And high levels of debt have amplified returns in both directions. He says that, at the macro level, it is not the current and future levels of government debt which is the main problem. It is the total level of debt accumulated over the past 10 years. And it wouldn’t be a speech from Garry Weaven without a call to arms. He says super funds need to take advantage of their relative strength on behalf of members. Don’t waste a good crisis, he says.