Brighter Super has turned to one of its group insurers to help it with a retirement solution for members who’ve accumulated enough that they don’t qualify for the full Age Pension, but not enough that they’re confident their income will last their whole lifetime. It’s the latest piece added to a retirement income puzzle that regulators say all funds must do more to solve.
Asset owners face the enduring challenge of how to achieve outperformance while managing risk effectively. Robeco quant client portfolio manager Rob Huisman says equity markets are now dominated by mega-cap tech stocks, creating a landscape where passive strategies offer cost-efficiency but limited upside and traditional active approaches bring unpredictability and higher costs.
The advantages of quant investing over fundamental investing, including how strategies respond in volatile market conditions, have been well proven over the past quarter of a century. Robeco head of Next Gen research Mike Chen says concerns about a lack of transparency are also unfounded.
Fresh from a big technology overhaul, Cook Islands National Superannuation Fund is ready to start diversifying its portfolio as risks grow in the US market. Its small size and remote location mean it lacks the advantages of some Australian funds, but CIO David Brown says that going to work in a Hawaiian shirt is still “pretty cool”.
The $365 billion AustralianSuper is taking a “wait and see” approach to macro uncertainty but continues to favour international equities over domestic due to scepticism around valuations.
The superannuation industry has largely mastered accumulation, at least from an investment perspective. Now, as a wave of employees emerges from the dressing room of compulsory accumulation onto the playing field of retirement, funds are grappling with the challenge of how to help members spend safely and confidently in retirement when no one knows when the full-time whistle will blow.
The biggest industry and profit-to-member funds are benefiting from an incumbency effect in retirement, with accumulation members sticking with them as they head towards drawdown. But funds have yet to conquer the problem of delivering retirement solutions.
Less than six months ago TelstraSuper and Equip Super said their due diligence process had convinced them there were substantial member benefits in a merger. But now TelstraSuper has withdrawn, saying that those benefits are unlikely to be achieved. Its withdrawal raises questions about the long-term sustainability of both funds.
Michael Clancy will preside over the circa $93 billion Rest Super’s 140-strong investment team as it looks to grow its membership and assets under management over the next decade. He is expected to bring a managerial bent to a role that has often had a pure investment focus.
Infrastructure and international equities will play a more prominent role in Australian Retirement Trust’s default investment strategy given higher expectations for inflation and volatility. The changes affect eight of 15 investment options, including the High Growth Pool which accounts for the bulk of its 2.4 million members.
When it comes to investment internalisation, it’s not just about making sure you’ve got the right remuneration to attract star stockpickers. The build out of operational infrastructure and incentivisation of the staff that run it will also be key determinants of success.
The $320 billion Australian Retirement Trust (ART) plans to double the size of its team in London by the end of the year. Michael Weaver, ART general manager of mid-risk assets and UK, says its approach will be low-key, hiring locally can be prohibitively expensive, and the cultural fit of staff located in a far-flung office is as important as the talent they bring.
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