Investors will have to contend with periods of high and low inflation in the next two decades amid high volatility and try to find investment opportunities in industries that disintermediate human capital, conference delegates heard.
“What we have right now is a disinflationary backdrop, not dissimilar to what we experienced over the last 25 to 30 years. But we also have significant inflationary spikes that will continue rolling on and off, on and off, every several years,” keynote speaker Viktor Shvets, managing director at Macquarie Capital said at the 2023 ASFA annual conference.
“This particular inflationary spike is not caused by aggregate demand or excessive speculation and, in theory, there is really no need to put the global economy into recession.”
To build resilience into asset portfolios, investors need to find companies that have the “ability to grow productivity at a low multiple, complemented by circular drivers,” which he explained was in industries which result in the replacement of workers such as automation and robotics or imitate humans including the fusion of info technology and biotech.
The conference kicked off in a week when the Federal government announced on Monday plans to legislate the objective of super. This development is an “important inflection point in the super narrative, offering a uniquely Australian view of retirement”, said ASFA independent chair Gary Dransfield in his welcome remarks to around 1100 delegates.
Cyber risk in focus
There was also a lot of discussion around the risk of cyber security and fraud in an increasingly digital world, one of APRA’s priorities for the year. Katrina Ellis, general manager, superannuation said the regulator was conducting its assessment of a second tranche of super funds for cyber vulnerabilities, having completed an assessment of the first nine. She expected the vast majority of funds will be assessed this year and APRA to share its main findings.
ASIC is currently focused on cyber and fraud risk right across the financial services industry and seeing how super funds treat members in the event of a cyber-attack. “We are concerned how you treat your members, how to protect members as best you can once a cyber-attack has occurred,” ASIC commissioner Danielle Press said.
It is crucial to make security breaches a reportable event and for companies to provide an avenue for the public to report system vulnerabilities and breaches, according to security researcher Troy Hunt.
Equally, the quality of reporting of breaches is “very important as it goes to overall confidence in the system”, said Emma Rosenzweig, deputy commissioner for superannuation and employer obligations at the Australian Taxation Office.