Australians nearing retirement face decisions more complex than at any other stage of their financial lives, yet it’s at this precise point the superannuation system lets them down. But super funds are heeding the message that they must deliver a better retirement experience and that it’s about far more than just product.
Future Fund chief investment officer Ben Samild says foreign currency exposure might be the most important return lever the fund has in its portfolios. At the Investment Magazine Fiduciary Investors Symposium in the Blue Mountains next week, Samild will take delegates on a deep dive into how the $241 billion fund has put into practice its belief that the investment thinking that delivered strong returns over previous decades needed to change.
The corporate regulator says that it won’t back down from its intense scrutiny of death benefit claims handling by superannuation funds and believes that boards and directors are unfamiliar with the nuts and bolts of their own funds.
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.
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