Three leading investment experts have called for the debate over how to classify growth and defensive assets to be abandoned, following an exchange of views in Investment Magazine.

Over the past 10 days IM has published views from PwC and Sam Sicilia, chief investment officer of HOSTPLUS on the issue.

PwC highlighted how differing interpretations of a defensive asset is leading to some funds within the Super Ratings SR Balanced (60-76) survey having 97 per cent in growth assets under the strictest interpretations.

In reply, Sicilia has called for a modernisation of such classifications to reflect the growing sophistication of asset allocations. He wants the defensive parts of infrastructure, property and other alternative assets to be reclassified as defensive asset.

Brad Holzberger, chief investment officer of QSuper, has said rather than modernise such definitions the debate should be abandoned.

He wants to take part in a debate “about which fund has moved which default members closer to retirement adequacy and what risk did they take (in terms of that retirement income) to get there,”.

This reflects the eight cohort strategies that QSuper is now offering its members.

Anthony Serhan, managing director, research strategy, Asia-Pacific at Morningstar, had a similar message.

“The debate should not be about what category a fund falls into, and how to define assets so that default strategies fall into the same grouping,” he said. “It should be whether that strategy is the right strategy for the members.”

He added that his personal view on the defensive/ growth debate was that where a security sits on the capital structure should be the primary determinant of whether an asset is growth or defensive.

“Accept the different risks you are taking when you step away from cash and bonds, make the case for why it is a good thing and be judged on the results,” he said.

Graeme Miller, head of investment Australia, Towers Watson, said that most investors had already moved beyond such a debate.

“Most institutional investors these days should be thinking about their assets in a more sophisticated way than whether it is growth or defensive,” he said. “Most have got the level of understanding and resources to do their analysis at a more sophisticated and multi-dimensional level. In that sense it probably is a bit out dated.”

Jeff Bresnahan, chief executive of SuperRatings, has said that if there is to be resolution on the matter then it needs to come from the regulators, as funds have their own ability to interpret what the regulations are.

“Until the regulator step ups and clarifies the situation you are always going to get different interpretations from fund to fund,” he said.

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