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Funds management – somebody tell Tourism NSW

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Funds management – somebody tell Tourism NSW One morning last December, pedestrians in Martin Place would have seen a line of chattering school kids making their way down the storied thoroughfare. Noticing that they were from St Kevin’s Primary School in Cardiff, a suburb of Newcastle, one might have wondered where the youngsters were headed. Excursion to see the Harbour Bridge and Opera House? Day at the Australian Museum? Perhaps even a tour of the nearby Reserve Bank to boost the financial literacy? Not a bit of it. You see, amongst the St Kevins kiddies was the daughter of Michael Negline, head of RCM Capital Management for Australia, and her lucky class were taking a trip to … his office. Chatting with Unbalanced as he waited for the group to arrive, Negline talked up the educational benefits of Level 57 in the MLC Centre. “The view will knock them out. Remember, they’re from Newcastle, some of them don’t know what an elevator is,” joked Negline who, as a genuine Knights-loving Novacastrian, is allowed to say that. He admitted that the kids wouldn’t get the full funds management experience. As a client service office, RCM Sydney ditched its Bloomberg terminal a while back, in favour of updates received through Negline’s “dodgy iPod”. All the same, Michael later reported his daughter’s friends were duly impressed by the vista from Daddy’s lobby, and seemed reasonably interested in the concept of an office, even if not all of them picked up on the finer points of global equities management. Ever the marketer, Negline made sure each young ’un also received an RCM pen as a memento.

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Hedge funds calm in volatile markets

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Looking over the Australian hedge fund industry numbers, home-grown managers did well. Australian market neutral equity funds returned a creditable 12.05 per cent (November year to date) with near bond-like volatility of just 8.6 per cent (as measured by annualised standard deviation). Long/short equity achieved a higher 28.51 per cent return on 15.98 per cent std dev. Overall, our universe of 150 Australian hedge funds (including several offshore hedge funds offered in Australia) returned 16.95 per cent year to date on a relatively low 13.55 per cent std dev.

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Fee model aligns with client interests

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Fund managers, along with the rest of the financial services industry, are being dragged into better aligning their business models with the objectives of their clients. This is hard work for the protagonists for change (mainly the institutional consultants) as well as the fund managers, whose livelihoods can seem threatened. Managers are under pressure for a variety of reasons, and just like market correlations, the reasons have coalesced at an unfortunate time. The zero-sum argument has certainly gained credence lately. It is widely held as axiomatic that a group of relative return fund managers must underperform their market benchmark after fees, but a change in sentiment amongst clients means that this knowledge is now being acted on. Where once clients charged themselves with choosing the best active manager, now they will be more likely to hold a market portfolio until a manager which can prove its claims of outperformance comes along.

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Net promotion score set to takeoff

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Too many marketing professors spend their lives just with students or bashing away at arcane academic research that no-one will ever read. Here, I thought to myself, is what marketing professors should be doing. I was attending, and speaking at, the first annual net promoter score session for superannuation funds initiated by Fund Executives Association Ltd (FEAL). As I listened to fund managers share experiences about member satisfaction, marketing tactics and consumer research I became increasingly convinced that this was an essential day for all those involved – including me. It was a long time in the making. More than two years earlier Michael Baldwin, CEO of FEAL, and I had talked long and hard about the possibility of offering superannuation funds the chance to measure their member satisfaction and share insights on their performance. At the time, many funds still seemed unsure of whether they were offering a competitive service or had truly satisfied members. With the market for superannuation likely to open up over the next decade it was a precarious position to find yourself in.

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Advice has greater role to play in pre-retirement stage

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Hindsight is a wonderful thing. This time last year when our sharemarket was nearing its global-crisis low, a small percentage of superannuation investors decided to switch to more conservative investment options. In the case of a friend of mine who celebrated his 50th birthday on February 26, his super fund effectively made the decision on his behalf. My friend belongs to a fund with an optional age-based ‘lifecycle’ strategy. The strategy gradually reduces member exposure to high-risk growth assets over a 10-year period – the trigger points being the member’s 50th and 60th birthdays. A few weeks ahead of his 50th birthday, my friend received an ‘opt-out’ letter from his fund explaining that his super would be switched to a mediumgrowth investment option.

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Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.

We acknowledge the Traditional Custodians of this land upon which Conexus Financial sits, the Cadigal of the Eora Nation. We recognise their continuing connection and unique cultural and spiritual relationships to the land, waters and community. We pay our deepest respects to them and their culture, and to Elders both past and present.

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