The greatest ever volume of equity raised by Australian companies in a financial year has revived businesses burdened by heavy debts, and settled investor anxiety about the survival of portfolio companies. But the dilution of profits across expanded shareholder bases is now entrenched, hurting returns unless companies ramp up earnings. SIMON MUMME reports. In late 2008, Paul Taylor and his Australian equities team at Fidelity Investments judged that roughly 50 per cent of the domestic market would conduct big capital raisings the following year. Six months on, after listed companies raised a record $90 billion for the 2008-09 financial year, the team was surprised by how far their estimate fell short. Like other domestic funds managers, Fidelity kept capital on the sidelines as the financial crisis hit markets, expecting companies would soon conduct equity issuances at steeply discounted prices.
When share dilution becomes the only solution
The greatest ever volume of equity raised by Australian companies in a financial year has revived businesses burdened by heavy debts, and settled investor anxiety about the survival of portfolio companies. But the dilution of profits across expanded shareholder bases is now entrenched, hurting returns unless companies ramp up earnings. SIMON MUMME reports. In late 2008, Paul Taylor and his Australian equities team at Fidelity Investments judged that roughly 50 per cent of the domestic market would conduct big capital raisings the following year. Six months on, after listed companies raised a record $90 billion for the 2008-09 financial year, the team was surprised by how far their estimate fell short. Like other domestic funds managers, Fidelity kept capital on the sidelines as the financial crisis hit markets, expecting companies would soon conduct equity issuances at steeply discounted prices.
While China may save us… Funds have work to do to adapt to post-crisis investing
The Australian Super and Investment Conference, on the Gold Coast September 16-18, looked at options facing the investment committees of super funds post-crisis. A record attendance of trustees, fund executives, managers and consultants seemed to agree on at least one thing – the world has changed inexorably. GREG BRIGHT reports. The big picture medium-to-longterm direction for institutional investors needs to be with the emerging markets, and in particular China, but the detail of portfolio construction is not so clear. In a post-crisis investment world the big picture seems relatively easy to see. Several speakers at the Australian Super and Investment Conference in September spoke of the anticipation of a continued growth in emerging markets in general, and China in particular, and only subdued growth, if any, in most of the West, and the US in particular, over the next couple of years.
While China may save us… Funds have work to do to adapt to post-crisis investing
The Australian Super and Investment Conference, on the Gold Coast September 16-18, looked at options facing the investment committees of super funds post-crisis. A record attendance of trustees, fund executives, managers and consultants seemed to agree on at least one thing – the world has changed inexorably. GREG BRIGHT reports. The big picture medium-to-longterm direction for institutional investors needs to be with the emerging markets, and in particular China, but the detail of portfolio construction is not so clear. In a post-crisis investment world the big picture seems relatively easy to see. Several speakers at the Australian Super and Investment Conference in September spoke of the anticipation of a continued growth in emerging markets in general, and China in particular, and only subdued growth, if any, in most of the West, and the US in particular, over the next couple of years.
ASIC’s intra fund advice relief challenges outsourced administration model
The Federal Government’s intra fund advice changes have removed the red tape for super funds in providing limited personal advice to members. However questions have been raised over the ability of funds with outsourced contact centres to adapt as easily to the new advice landscape. KRISTEN PAECH reports. In launching On Track, a new retirement program for members, Queensland’s Sunsuper became the first private sector fund to manage its entire advice process, from general advice through to full financial planning, inhouse. Most funds, with the exception of large public sector funds like QSuper and Australian Reward Investment Alliance (ARIA), outsource their contact centre to their administration provider.
ASIC’s intra fund advice relief challenges outsourced administration model
The Federal Government’s intra fund advice changes have removed the red tape for super funds in providing limited personal advice to members. However questions have been raised over the ability of funds with outsourced contact centres to adapt as easily to the new advice landscape. KRISTEN PAECH reports. In launching On Track, a new retirement program for members, Queensland’s Sunsuper became the first private sector fund to manage its entire advice process, from general advice through to full financial planning, inhouse. Most funds, with the exception of large public sector funds like QSuper and Australian Reward Investment Alliance (ARIA), outsource their contact centre to their administration provider.
Banks set to shake up life settlements
Institutional investors may be shaking off any reputational aversion they had to life settlements, desperate as they are for genuinely uncorrelated assets. MICHAEL BAILEY examines the current state of the asset class and its two means of access – synthetic or physical. The life settlements market has benefited from the entry of large investment banks, which have helped the industry shake its “cowboy” image, according to a visiting actuary and advocate for prospective investors in the asset class. David Fishbaum leads the actuarial unit of Oliver Wyman, a sister company to Mercer under the Marsh McLennan umbrella. He was in Australia last month to speak to a growing number of local institutions interested in life settlements, attracted by the promise of a 13 per cent annual coupon, but worried about the reputational risk of investing in a ‘death fund’.
Banks set to shake up life settlements
Institutional investors may be shaking off any reputational aversion they had to life settlements, desperate as they are for genuinely uncorrelated assets. MICHAEL BAILEY examines the current state of the asset class and its two means of access – synthetic or physical. The life settlements market has benefited from the entry of large investment banks, which have helped the industry shake its “cowboy” image, according to a visiting actuary and advocate for prospective investors in the asset class. David Fishbaum leads the actuarial unit of Oliver Wyman, a sister company to Mercer under the Marsh McLennan umbrella. He was in Australia last month to speak to a growing number of local institutions interested in life settlements, attracted by the promise of a 13 per cent annual coupon, but worried about the reputational risk of investing in a ‘death fund’.
Smaller hedge fund industry more attractive for investors
The third annual Absolute Returns Funds conference for super funds, produced by Investment & Technology, canvassed a range of issues faced by super funds in assessing alternative investments. GREG BRIGHT and MICHAEL BAILEY report. Absolute returns strategies using alternative investments are far from dead post-crisis, it would seem, although their use in both asset allocation and portfolio construction is changing due to lessons learned from the past two years. The annual Absolute Returns Funds conference for super funds, held in Melbourne in September, was told, for instance, that “after the flood” the hedge fund industry would be much more attractive to investors. Greg Moessing, a managing director of the influential consulting group Cambridge Associates, said that this would be a smaller industry and the balance of power was shifting from dominance by general partners (managers) to limited partners (investor fund structures).
Smaller hedge fund industry more attractive for investors
The third annual Absolute Returns Funds conference for super funds, produced by Investment & Technology, canvassed a range of issues faced by super funds in assessing alternative investments. GREG BRIGHT and MICHAEL BAILEY report. Absolute returns strategies using alternative investments are far from dead post-crisis, it would seem, although their use in both asset allocation and portfolio construction is changing due to lessons learned from the past two years. The annual Absolute Returns Funds conference for super funds, held in Melbourne in September, was told, for instance, that “after the flood” the hedge fund industry would be much more attractive to investors. Greg Moessing, a managing director of the influential consulting group Cambridge Associates, said that this would be a smaller industry and the balance of power was shifting from dominance by general partners (managers) to limited partners (investor fund structures).
Rethinking fixed interest: making the ‘30’ different from the ‘70’ again
Institutional investors have been forced to decide whether they will rebalance to their pre-crisis equity allocations, which has thrust the traditional alternative in to the spotlight. “The fixed income asset class is now getting its fair share of attention amongst investment consultants, fund researchers and trustee boards…and about time too!” exclaimed Simon Doyle, Schroder Investment Management head of fixed income and multi-asset, last month. However, this re-assessment of fixed income is not always resulting in new, alpha-seeking active mandates. In fact, many investors seem determined to make fixed income truly ‘defensive’ again, as MICHAEL BAILEY reports.
Rethinking fixed interest: making the ‘30’ different from the ‘70’ again
Institutional investors have been forced to decide whether they will rebalance to their pre-crisis equity allocations, which has thrust the traditional alternative in to the spotlight. “The fixed income asset class is now getting its fair share of attention amongst investment consultants, fund researchers and trustee boards…and about time too!” exclaimed Simon Doyle, Schroder Investment Management head of fixed income and multi-asset, last month. However, this re-assessment of fixed income is not always resulting in new, alpha-seeking active mandates. In fact, many investors seem determined to make fixed income truly ‘defensive’ again, as MICHAEL BAILEY reports.
