Eight Investment Partners, the pan-Asia boutique, has appointed an executive director to implement a credit capability to be run alongside Kerry Series’ equity strategy.
Unbalanced
MTAA on the canvas MTAA Super has been the first in many things over the years: such as having a painting commissioned of its secretariat. (Cbus famously owns a bunch of artworks, but none of itself as far as we know.) The story starts back in 1999, when chief executive of the fund and the motor trades association, Michael Delaney, was walking out of a meeting in Parliament House. As a contemporary report in The CanberraTimes has it, he noticed the huge Tom Roberts’ impression of the opening of the Australian Parliament, and thought ‘we should have one of those’. In classic ‘bicentennial project’ fashion, Canberra artist Michael Winters was contracted, and soon attended one of the MTAA’s board meetings to note ‘personal idiosyncrasies’ and make sure he got the likenesses of directors and their staff. Seven months later, Winters had completed a huge oil on canvas measuring 3.3 by 1.4 metres, and depicting no fewer than 39 of the MTAA milieu. The painting took pride of place in the second boardroom at MTAA House for many years. Unfortunately the MTAA communicates with us via lawyers’ letters only these days, so we can’t confirm a story that the work has more recently been retired, along with Winters’ individual portraits of certain former MTAA presidents.
Super gets a reality check
For as long as I’ve worked in the super industry – 15 years at last count – member engagement has been a hot topic, writes AIST CEO Fiona Reynolds. Be it at industry conferences, roundtable debates or at the office water-cooler, when the talk turns to member engagement – particularly the challenge of getting young people interested in their super – there is invariably a lot of heavy sighing and head-scratching.
Top hedge funds earning 20% pa + since inception
Australian hedge funds reported a positive 0.15 per cent return on average for February, and a minus 1.11 per cent for the first two months of 2010. The annualised compound return for the industry on average (since inception for each hedge fund) is 8.64 per cent. Nine funds returned more than 20 per cent a year on annualised compound returns over at least three years. These nine are on the table that follows.
Options increase for risk-management in asset allocation strategies
As risk becomes more relevant to fund members as they enter retirement, new approaches to investment are being assessed. Broadly speaking, they fall into one of three categories: • Administration strategies • Derivative strategies • Insurance/outsourcing Administration strategies Administration strategies rely on dynamically altering the underlying investment mix to achieve a smoother return or risk-management outcome. Three approaches that appear to be growing in popularity are targetdate funds, target-volatility funds, and continuous portfolio protection insurance (CPPI). Target-date funds: This strategy rebalances investors’ assets between different mixes of conservative and growth assets based on an age-based “glide path,” traditionally focused on the investor’s planned retirement age. The principle behind target-date funds (also known as life-cycle funds, targetmaturity funds, and age-based retirement funds) is that investors need to adopt more conservative investment styles as they approach retirement. Target-date funds, however, have become the subject of much criticism.
Service providers battle for the boutique spend
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The stereotype is familiar: two gun portfolio managers leave an institution, ‘hang a shingle’ outside a small office, begin running money and living their entrepreneurial dream. But like all stereotypes, this is far too convenient and masks the complexity of some boutiques’ operations. There is no standard model for boutiques. “It could be as simple as a guy with a spreadsheet and a phone, trading Australian equities through IRESS,” says Bruce Russell, a former Morse consultant who now contracts for Victorian Funds Management Corporation. Sometimes the start-ups form when an entire product team at an institution walks – recall how the nine-person domestic equities team at Suncorp became Solaris Investment Management, almost overnight, in 2007. But as new business ventures, boutiques must come to terms with institutional demands for operational strength, and most have no choice but to outsource their back-office functions.
Super funds must lobby for preventive mental health
Group insurers are paying out up to $200 million a year for mental illness claims and much of this could be prevented through early intervention and treatment. Some experts estimate the on-costs and opportunity-costs reach $30 billion. This gathering of government, mental health experts, counselling services, super funds and group insurer CommInsure discusses funds’ successes and failures in early detection and prevention. Government participation is crucial, but it must be integrated, well-funded and aimed at prevention rather than high-cost emergency, hospital-based care Roundtable participants were:
Warts and worse show on super’s ‘agents’
At the latest workshop for the Paul Woolley Centre for Capital Market Dysfunctionality, held at UTS in April, Professor Ron Bird outlined upcoming research, including work of his own with Jack Gray, on the economic consequences of dysfunctional markets. Bird and Gray (who is a director of alternatives placement agent Brookvine and part-time academic) have looked at “the puzzle of active management” and “investors’ response to uncertainty”. They are planning research projects including “a new framework for the superannuation industry” and “how do fund managers treat institutional investors and why do the investors take it?” Bird and Gray’s work has led them to believe that an “uplift” – either increased returns or savings – of about 3 per cent a year is available to super funds.
Rocky Road – The Ups and Downs of MTAA Super
Walk outside MTAA House in Canberra, look to the left, and you are rewarded with a pretty good view of the flags flying on Capitol Hill. But it’s not just location that Australia’s Parliament House and 39 Brisbane Avenue, Barton, have in common. The most important man in both buildings seems to be a control freak. In Prime Minister Kevin Rudd’s case, the autocratic tendencies reveal themselves in a prodigious work ethic, which sees him micromanage the release of announcements at the same rate he burns out ministerial staff. Down the road, Michael Delaney is in the unique position of having created the two organsiations which take up all of level 3 at MTAA House – the Motor Trades Association of Australia (MTAA Ltd), and its associated industry superannuation fund, MTAA Super. At the time of writing, he remained the executive director of the former, and principal executive officer of the latter. According to those who’ve been on the boards of either or both over the years, there’s not much that goes on in this House which the boss doesn’t know about, either. Assets need careful, elegant allocation
People are doing a lot of things a bit differently these days. They’re spending a little more time with their kids, for instance. According to the trashy magazines, they are also being a little more patient/ understanding with their spouses. They’re also being a little more cautious with their spending. Blame it on the GFC. In the running of super funds, things have changed a little too. Risk controls, clearly, are being discussed with more passion at board and lower levels. And relationships with most service providers have been reassessed. For some, asset allocation processes may have altered, with consultants being given more, or less, power to make decisions. But has anything really changed that much? And will the little which has changed last that long? It’s the Cooper storm that’s killed super fund marketing
The era of advertising and sponsorships by superannuation funds is surely over. The exact date it ended will be recorded as April 23, 2010, when HOSTPLUS dramatically pulled its major sponsorship of National Rugby League team Melbourne Storm, after the jaw-dropping revelations of salary cap rorting. But I’d argue the show was over three days earlier, when Jeremy Cooper’s Super System Review delivered its preliminary report introducing ‘MySuper’, the quiet younger brother of the default option. Protecting retirement savings protects the economy
In particular there has been a suggestion that the tax treatment of interest on bank deposits be brought into line with the tax on returns to superannuation. Any change to the tax treatment of superannuation relative to other forms of savings puts at risk the retirement incomes of Australians, the pool of savings that sustained Australia through the global financial crisis and the Government’s five-point plan to reduce pressure on prices and interest rates. Earnings from superannuation funds are currently concessionally taxed at 15 per cent. There are dual policy reasons for superannuation to be concessionally taxed. Superannuation allows people to save towards becoming selffunded retirees which reduces the dependence on the age pension and ultimately reduces the burden on the Commonwealth Budget.
