Funds will struggle to deliver the same returns as previous years for the same level of risk, but should consider taking some risk off the table, experts said in a panel discussion looking at the challenges of the current market.

Tanya Branwhite, head of portfolio construction at TCorp, Australia’s second largest sovereign fund, said history doesn’t repeat, but it does rhyme, noting there are some parallels today to the 1970s and its energy shocks, the Vietnam War and the Cold War.

In an environment of higher inflation and constrained fiscal policy, funds will find it hard to deliver the same levels of real return as previous years for the level of risk they are willing to take, she said, speaking at Conexus Financials Fiduciary Investors Symposium held in Sydneys Blue Mountains region.

Investors “may have over-earned for the amount of risk that they were actually taking at that time,” Branwhite said. “Low risk assets were actually delivering higher real returns than probably the long run would suggest, and that was because we had this secular downdraft in inflation which made real returns very…attractive across the whole spectrum of investments.

(L-R) Alistair Barker; Tanya Branwhite; Conexus Financial’s Colin Tate.


Alistair Barker, head of asset allocation at Australian Super, said the fund aims to have “more risk on the table when we think it’s being well rewarded,” and now is a time to consider taking risk off the table.

“Markets are most risky when valuations are high and theyre priced for perfection,” Barker said. “There’s been a really good ten years, you know, up until the end of 2021, probably the best 10-year period in the last 150 years. Surely that should be a sign we should be more worried.”

The fund’s CPI plus 4 mandate has never changed since the fund was incepted, Barker said, and “with the benefit of hindsight it was too low before.”

The question for the near future is whether it will be too high due to the impact of inflation on real returns, he said. Delivering it over the next five years will be difficult, but it is still likely on a longer term basis, he said.

Every day a day for a Teams call

The discussion moved to flexible working, and Barker said he “liked flexible work before and Covid ruined it,” having worked flexibly from a country location pre-pandemic. Time out of the office was great for focused work, he said. But after the pandemic began, “everyone thought that every day was a day to have a MS Teams call.”

Hybrid working models work well for people who are engaged and productive, but fail people who are underperforming, he said. “So in many senses I think we probably do need some clearer rules.”

The fund had experimented with closing floors to ensure higher numbers of people in the open floors to ensure a level of vibrancy that workers were looking for when they came to the office.

“Getting a critical mass of people has been a really important thing,” Barker said.

T-Corp workers are in the office three to four days a week, Branwhite said, and are expected to attend team meetings in person. Some functions work better than others from home, such as coding by members of the IT team, but collaboration and sharing of ideas happens much better when face to face.

“I actually found Covid really lonely, I certainly personally really feed off the energy of my team and my peers,” Branwhite said. “I really just like being in the office, I like the structure of the day.”


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