Passive equity strategies have grown to dominate the investment landscape, but rising concentration risks, benchmark performance tests, and hidden passive costs are prompting asset owners to consider more nuanced approaches.
Despite prevailing pessimism, Stanford University academic Professor Stephen Kotkin has told the Investment Magazine Fiduciary Investors Symposium that the US’ role as a global superpower is a long-term trend asset owners can count on. But one of the most significant issues they must navigate is how the US and China learn to co-exist while pursuing diametrically opposed objectives.
Asset owners that tip billions into a broad emerging markets opportunity set and hope for the best will likely get the worst outcomes. A better way is to examine each country and manager on their own merits.
The Australian Securities and Investments Commission’s review of how superannuation funds communicate with members on retirement issues has revealed patchy progress and raised multiple issues requiring further attention and action. But funds say the report a useful assessment of progress to date and the specific improvements they can make.
The Mercer CFA Institute Global Pension Index ranks Australia’s pension system seventh-best in the world, with the Netherlands continuing to lead the way. An improvement in Australia’s score over last year was due primarily to better adequacy, driven by an increase in superannuation guarantee contributions. A lack of compulsion on taking income in retirement continues to be a drag.
With more of their investments increasingly subject to “rule-of-law” risk, and even exceptional assets overvalued, the Investment Magazine Fiduciary Investors Symposium has heard that while many asset owners remain bullish about US exceptionalism, they are questioning how much they are willing to pay for it.
AustralianSuper CIO Mark Delaney says that a profit-to-member superannuation industry defined by similarities between funds is a thing of the past. But it will have to keep changing if it wants to keep up with the retail platforms.
Superannuation investment in the UK is expected to more than double over the next decade in a boon not just for the retirement savings of everyday Aussies, but also the British economy, at a time when the world is grappling with political turbulence. But governments can still do more to give the stewards of pension capital the confidence their investments will deliver members the best returns.
Australia and the UK have very different pension landscapes, but the latter might have a leg up on the land down under when it comes to performance testing and retirement advice and defaults, writes David Bell.
The CIO of the $413 billion AustralianSuper says the fund is quick to terminate underperforming internal investment strategies but defended its policy of not disclosing their returns. He also believes that the rise and rise of passive investing could be an existential threat to active managers.
Career regulator Helen Rowell, who was arguably the public face of APRA’s push for superannuation consolidation during the Morrison government years, will take the reins as chair of Australia’s second largest fund. Rowell, who has served on the ART trustee board since last year, follows a string of high-profile executive and board changes at the mega-fund.
A total portfolio approach is widely reported as being more commonly adopted within the Australian superannuation sector. Mark Neary, product leader for BNY Data and Analytics, Asia-Pacific, says this raises questions for a fund’s data strategy, technology and service partnerships as they work to empower their human intelligence with artificial intelligence.
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Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.
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