While it’s certain that automating fund transactions is a must, the process has become bogged down in pass-the-fax excuses. MIRANDA WARD reports.
Funds move on SMSFs’ advance
Much of the wealth amassed in the self-managed superannuation sector has been directly rolled out of industry and retail funds. Should collective funds clearly differentiate themselves from this new competitor, or adapt some of its attributes as they develop strategies to retain members? SIMON MUMME and PHILIPPA YELLAND report.
Super Cheap Super – Funding Retirement at Bargain Cost
Just over two years from now, the first MySuper vehicle is scheduled to roll down the gangway, and swallow up all the default members of whichever super fund has created it. In building the vehicle, however, many stakeholders worry that ‘low-cost’ will have been too much of an imperative. Where will these cost savings have come from? Talk to member administrators or group insurers today, and they’ll tell you that they have no fat to spare. So funds management costs seem to be the obvious target for this new austerity. MICHAEL BAILEY and SIMON MUMME report on how a ‘race to the bottom’ on costs may affect the institutional investment industry.
Investment psychology makes us all look silly
Professional investors are, of course, smarter than the rest of us. They have a massive information advantage over the average punter and are well aware of all the behavioural biases which may interfere with rational decision-making. Hmm. This entertaining graphic from global financial services website Citywire is actually designed for the professional investor. The theory, and practice, is that professional investors are also human beings, and have all the failings of the ‘average’ investor.
Track the true sources of risk
Professor Amin Rajan at CREATE Research has put questions to institutional investors for years. And each year he publishes an independent report on the global investment industry. From the interviews he has conducted so far in 2011, Rajan says the theme of this year’s report will be innovation. It’s fitting that investors have this subject front-of-mind, given that “crisis is the mother of innovation,” he says. In search of ways to improve the way they invest, some pension funds have adopted new asset allocation strategies focused on underlying risk factors instead of asset ‘buckets’.
Zebra taps into Australian liquidity
The funds manager cofounded by Roger Ibbotson, Zebra Capital Management, has back-tested its liquidity-focused equities strategy in the Australian market and found evidence of persistent outperformance. In back-tests covering the 15 years to 2010, Zebra found its ‘liquidity-return’ strategy outperformed the MSCI Australia index in all but three years: 1998, 2005 and 2006, when the market made strong gains. Zebra showed defensive qualities as it outperformed in 72 per cent of the months when the benchmark fell by more than 3 per cent, but tended to deliver flat performance when the market fell by less than 3 per cent.
Making news in February 2011
Everything that happened in the worlds of superannuation, funds management and investment administration last month… The Australian exchange traded fund (ETF) market is expected to grow to more than $6 billion in assets under management during 2011, according to analysis from Russell Investments. Greater investor understanding and the death of trailing commissions, which ETF providers have never paid, are credited for the expected surge. There was almost $4bn in ETFs at December 2010. Access Capital Advisers will bow out of Westscheme by the end of 2011, following that fund’s roll-in into AustralianSuper.
How the GFC changed funds management
Holders of the Chartered Financial Analyst (CFA) designation tend to think deeply about the future of funds management – especially now, in the wake of the global financial crisis, where the true meaning and importance of asset allocation and risk management are being reassessed. The vice-president of Sydney’s CFA society, RICHARD BRANDWEINER, here summarises his colleagues’ latest thinking on the subject.
