Since compulsory superannuation was introduced in the early 1990s, the focus of financial planners has been on strategies to maximise contributions and accumulation; and the focus of product manufacturers has been on products to cater to those strategies. But as an increasing number of super fund members move from the accumulation phase of their financial lifecycle into the post-retirement phase, the focus of planners and manufacturers has likewise begin to shift. SIMON HOYLE reports.
Residential housing: the $4 trillion super funds haven’t touched
Last month, the Federal Minister for Housing, Tanya Plibersek, stood up in the Sydney boardroom of JPMorgan and attempted to do something which has been tried, unsuccessfully, many times before. She was appealing to institutional investors to consider residential property. Specifically, Plibersek was asking them to get behind the National Rental Affordability Scheme (NRAS), which is offering Government subsidies to developers of housing deemed ‘affordable’ – that is, rented out at 20 per cent below market rates. There are special allowances for major institutions (Plibersek has singled out super funds) willing to back major developments of 1000 or more sustainable dwellings. Veteran property consultant Ken Atchison has seen such attempts to sway institutions before, and he doesn’t think the NRAS has solved fundamental problems which have kept them away to date. “The biggest problem is how you assemble a portfolio.
Residential housing: the $4 trillion super funds haven’t touched
Last month, the Federal Minister for Housing, Tanya Plibersek, stood up in the Sydney boardroom of JPMorgan and attempted to do something which has been tried, unsuccessfully, many times before. She was appealing to institutional investors to consider residential property. Specifically, Plibersek was asking them to get behind the National Rental Affordability Scheme (NRAS), which is offering Government subsidies to developers of housing deemed ‘affordable’ – that is, rented out at 20 per cent below market rates. There are special allowances for major institutions (Plibersek has singled out super funds) willing to back major developments of 1000 or more sustainable dwellings. Veteran property consultant Ken Atchison has seen such attempts to sway institutions before, and he doesn’t think the NRAS has solved fundamental problems which have kept them away to date. “The biggest problem is how you assemble a portfolio.
Fee the difference: where fees stop and true super costs begin
Superannuation funds are feeling the pressure – from the government, from members – to keep published fees low or to cut them further. But however low they go, upfront fees do not capture the true costs that members pay. Without an overhaul of the current rules governing fee disclosure, funds’ efforts to meet the demand for low-cost super become futile. SIMON MUMME reports.
Fee the difference: where fees stop and true super costs begin
Superannuation funds are feeling the pressure – from the government, from members – to keep published fees low or to cut them further. But however low they go, upfront fees do not capture the true costs that members pay. Without an overhaul of the current rules governing fee disclosure, funds’ efforts to meet the demand for low-cost super become futile. SIMON MUMME reports.
Why does it feel so strange? Lasting changes in fiduciary investors’ strategies
In 1996, Peter Ryan-Kane wrote a paper called ‘The Living Room Effect’ in which he mused about the impact of a shrinking world on institutional investing. The Berlin wall had come down, CNN was making its presence felt and the internet was gaining traction – all visible from living rooms around the world, even in poor countries. The upshot has been, at least in part, that countries and markets have lost some of their idiosyncratic nature. They have become much more generic, adopting a global business model. The implications for diversification through global portfolios are obvious.
Why does it feel so strange? Lasting changes in fiduciary investors’ strategies
In 1996, Peter Ryan-Kane wrote a paper called ‘The Living Room Effect’ in which he mused about the impact of a shrinking world on institutional investing. The Berlin wall had come down, CNN was making its presence felt and the internet was gaining traction – all visible from living rooms around the world, even in poor countries. The upshot has been, at least in part, that countries and markets have lost some of their idiosyncratic nature. They have become much more generic, adopting a global business model. The implications for diversification through global portfolios are obvious.
Why does it feel so strange? Lasting changes in fiduciary investors’ strategies
In 1996, Peter Ryan-Kane wrote a paper called ‘The Living Room Effect’ in which he mused about the impact of a shrinking world on institutional investing. The Berlin wall had come down, CNN was making its presence felt and the internet was gaining traction – all visible from living rooms around the world, even in poor countries. The upshot has been, at least in part, that countries and markets have lost some of their idiosyncratic nature. They have become much more generic, adopting a global business model. The implications for diversification through global portfolios are obvious.
Why does it feel so strange? Lasting changes in fiduciary investors’ strategies
In 1996, Peter Ryan-Kane wrote a paper called ‘The Living Room Effect’ in which he mused about the impact of a shrinking world on institutional investing. The Berlin wall had come down, CNN was making its presence felt and the internet was gaining traction – all visible from living rooms around the world, even in poor countries. The upshot has been, at least in part, that countries and markets have lost some of their idiosyncratic nature. They have become much more generic, adopting a global business model. The implications for diversification through global portfolios are obvious.
Consultants’ revival
It has almost become irresponsible for a super fund to set and forget its strategic asset allocation, according to Fiona Trafford-Walker, managing director of Frontier Investment Consulting. Using a rollercoaster analogy, Trafford-Walker says the idea of a fund strapping itself in and hoping for the best does not make sense any more. “If you’re well strapped in and you’ve got a good stomach, that’s fine, but if you’re not well strapped in and you’ve got a weak stomach then it’s not fine, and the thing with a rollercoaster is you can’t get off in the middle,” she says. Frontier has been actively managing clients’ assets for about 10 years, according to Trafford-Walker, but has only recently begun labelling it dynamic asset allocation (DAA) in response to the jargon’s entry into the investment lexicon.
Consultants’ revival
It has almost become irresponsible for a super fund to set and forget its strategic asset allocation, according to Fiona Trafford-Walker, managing director of Frontier Investment Consulting. Using a rollercoaster analogy, Trafford-Walker says the idea of a fund strapping itself in and hoping for the best does not make sense any more. “If you’re well strapped in and you’ve got a good stomach, that’s fine, but if you’re not well strapped in and you’ve got a weak stomach then it’s not fine, and the thing with a rollercoaster is you can’t get off in the middle,” she says. Frontier has been actively managing clients’ assets for about 10 years, according to Trafford-Walker, but has only recently begun labelling it dynamic asset allocation (DAA) in response to the jargon’s entry into the investment lexicon.
Time for action on governance but who should be the catalyst?
When Barack Obama was awarded this year’s Nobel Peace Prize it tended to overshadow all other prizes, including the one for economics. The Nobel prize for economics went to two US academics, Elinor Ostrom of Indiana University and Oliver Williamson of University of California Berkeley, for years of work into the efficiency of institutions, such as large companies, compared with the marketplace in general. Their work has generally been supportive of the behaviour of companies, as well as other groups acting together, rather than individuals.
