The $330 billion Australian Retirement Trust has used its previously confidential submission to ASIC to warn against duplication of an already “comprehensive” private markets regulatory framework while calling out the rapidly growing evergreen fund sector as potentially requiring more oversight.
The Investment Magazine Fiduciary Investors Symposium heard that Australia needs about $500 billion of capital investment to facilitate the energy transition. But asset owners face the question of how to generate long-term resilient returns from an investment thematic that is increasingly politicised.
Rather than making advice through super a battleground issue, the focus should be on making it work well, write David Bell and Geoff Warren. Funds have the responsibility and are well-positioned to assist their members who would otherwise receive no advice as they approach and enter retirement.
Pension fund members in retirement want the sustainability of pension payments. OPTrust chief investment officer James Davis told the Top1000Funds Fiduciary Investors Symposium that he believes a total portfolio approach (TPA) is the best way to deliver that, and it’s been a journey towards delivering for the past 10 years.
For decades it seemed the most important thing super funds did was generate strong long-term returns. That emphasis is shifting as more members move into retirement, and as they generally take up a broader range of services, and if funds fail members at any time, the investment team could also be tarnished.
The private debt markets by nature are less transparent than public markets and managers should be held accountable for any misinformation and dishonest disclosure to investors, credit manager Polen Capital has acknowledged. But it has warned that over-regulation in the sector could restrict investment freedom.
The Australian Securities and Investments Commission will step up its monitoring of private credit exposures and valuations following a major consultation on public and private markets. However, ASIC Commissioner Simone Constant told the Investment Magazine Fiduciary Investors Symposium NSW that private credit can be “good for the economy … if done well”.
It might be time for asset owners to diversify away from the United States – but they should also beware the “Thucydides Trap” and pay attention to small markets that might benefit from money leaving North America.
Equity volatility as an asset class is increasingly recognised as a useful diversifier in portfolios, but the cost can be off-putting for some investors. The Fiduciary Investors Symposium in the Blue Mountains hears the case for incorporating active management in volatility strategies.
Treasurer Jim Chalmers’ proposed levy on unrealised gains in super funds isn’t reform, it’s our home-grown equivalent to “Liberation Day”: reactive, populist and a money grab as a budget filler. Reform is indeed needed, but one which equally builds a moat around our $4 trillion super from self-serving political grabs from both sides of the political fence.
With a growing number of Australian asset owners starting down the path to adopting a total portfolio approach, there’s a wealth of knowledge to be gleaned from their international peers.
Aware Super is keeping a close eye on Your Future, Your Super “complications” as it tries to decarbonise its portfolio and invest in the transition – and Rest, wary of geopolitical upheaval, is doing the same.
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